• CBI books  DHFL involved in 'largest' banking fraud of Rs 34,615 crore; 17 banks affected

    National

    The audit of DHFL account books revealed that the company allegedly committed financial irregularities, diverted funds, fabricated books, and round-tripped funds in order to "create assets for Kapil and Dheeraj Wadhawan" with public funds.

    Digital Desk: According to officials, the CBI has charged Dewan Housing Finance Ltd, its former CMD Kapil Wadhawan, director Dheeraj Wadhawan, and others with bank fraud totaling Rs 34,615 crore, making it the largest such case investigated by the agency.

    Following the filing of the case on June 20, a team of over 50 officials from the agency conducted coordinated searches on 12 premises in Mumbai belonging to FIR-listed accused, including Sudhakar Shetty of Amaryllis Realtors and eight other builders, on Wednesday.

    The action was taken in response to a complaint filed by the Union Bank of India (UBI), the leader of a 17-member lender consortium that extended credit facilities totaling Rs 42,871 crore between 2010 and 2018.

    The bank claims that Kapil and Dheeraj Wadhawan, in criminal conspiracy with others, misrepresented and concealed facts, committed criminal breach of trust, and abused public funds to defraud the consortium of Rs 34,614 crore by failing to make loan repayments beginning in May 2019.

    The audit of DHFL account books revealed that the company allegedly committed financial irregularities, diverted funds, fabricated books, and round-tripped funds in order to "create assets for Kapil and Dheeraj Wadhawan" with public funds.

    Both are being held in judicial custody in connection with previous fraud cases.

    Lender banks declared the DHFL loan accounts non-performing assets at various points in time, they said.

    When DHFL was subjected to an investigation in January 2019 following media reports of allegations of fund syphoning, the lender banks convened on February 1, 2019 and appointed KPMG to conduct a "special review audit" of DHFL from April 1, 2015 to December 31, 2018.

    On October 18, 2019, the banks issued a Look Out Circular against Kapil and Dheeraj Wadhawan to prevent them from leaving the country, they said.

    According to the UBI, KPMG flagged diversion of funds in the form of loans and advances to related and interconnected entities and individuals of DHFL and its directors in its audit. Account books revealed that 66 entities with ties to the DHFL promoters received Rs 29,100 crore in payments, with Rs 29,849 crore still owed.

    "The majority of such entities' and individuals' transactions were in the nature of investments in land and properties," the bank claimed.

    It was revealed that the DHFL disbursed funds within one month in a number of instances, diverted funds for investment in Shetty entities, loans were rolled over without NPA classification, repayments worth hundreds of crores were untraceable in bank statements and an unjustified moratorium on principal and interest was granted.

    Another significant amount outstanding in DHFL accounts was Rs 11,909 crore, which resulted from loans and advances totaling Rs 24,595 crore made to 65 entities between April 1, 2015 and December 31, 2018.

    The DHFL and its promoters also disbursed Rs 14,000 crore as Project Finance but recorded it in their books as retail loans.

    As a result, an inflated retail loan portfolio of 1,81,664 false and non-existent retail loans totaling Rs 14,095 crore was created.

    The loans known as "Bandra Books" were kept in a separate database before being merged with Other Large Project Loans (OLPL).

    "It was revealed that the aforesaid non-existent retail loans amounting to Rs 14,000 crore were largely carved out of the aforesaid non-existent retail loans, out of which Rs 11,000 crore was transferred to OLPL loans and Rs 3,018 crore was retained as a part of the retail portfolio as unsecured retail loans," it claimed.

    The DHFL, its directors, and executives maintained that they were attempting to de-stress the company through various means such as securitization of a pool of housing loans, project loans, and divestment of promoters' stake in the company.

    According to the bank, Kapil Wadhawan continued to maintain that DHFL has six months of cash liquidity and will remain cash surplus even after all repayment obligations are met.

    The DHFL delayed interest payment obligations to terms loans in May 2019 after being "falsely assured" by lenders, they said, and the account was declared a non-performing asset.

     

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