CBI books DHFL in ‘largest’ financial scam of Rs 34,615 crore; 17 banks struck

They maintained that they were trying to de-stress the firm by different ways such as securitization of pool of housing loans, project loans, and disposal of promoters’ share in the company, but the DHFL, its directors, and its executives remained insisting that they were trying to do so.


  • 50 agents of the Central Bureau of Investigation (CBI) carried out coordinated searches on 12 locations in Mumbai on Wednesday.
  • After receiving a complaint from the Union Bank of India, the action was taken (UBI)
  • At various times in time, the lender determined that certain loan accounts held by DHFL should be classified as non-performing assets.

Officials announced on Wednesday that the Central Bureau of Investigation (CBI) has filed charges of bank fraud totaling Rs 34,615 crore against Dewan Housing Finance Ltd., its former chief managing director Kapil Wadhawan, director Dheeraj Wadhawan, and other individuals. This case is the largest of its kind that the CBI has ever investigated. After the case was registered on June 20, a group of more than 50 officials from the agency conducted coordinated searches on 12 properties in Mumbai that belonged to FIR-listed accused individuals on Wednesday. These individuals include Sudhakar Shetty of Amaryllis Realtors as well as eight other builders.

The action was taken in response to a complaint made by the Union Bank of India (UBI), which was the head of a lender consortium consisting of 17 different financial institutions and which had provided loan facilities totaling Rs 42,871 crore between the years 2010 and 2018. The bank has made the allegations that Kapil and Dheeraj Wadhawan, along with other individuals, participated in a criminal conspiracy to misrepresent and conceal facts, commit criminal breach of trust, and abuse public funds in order to defraud the consortium to the tune of Rs 34,614 crore by failing to make loan repayments beginning in May 2019. The audit of DHFL’s account books revealed that the company allegedly engaged in financial misconduct, including the diversion of funds, the fabrication of books, and the round-tripping of funds, all with the intention of “creating assets for Kapil and Dheeraj Wadhawan” using money that came from the public coffers. Both are being held in jail by the court in connection with earlier allegations of fraud levelled against them.

According to what they indicated, the DHFL loan accounts had been labelled non-performing assets by the lending banks at various times in time. As a result of DHFL being the subject of an investigation in January 2019, following the publication of media reports alleging the theft of funds, the lender banks convened a meeting on February 1, 2019, during which they appointed KPMG to carry out a “special review audit” of DHFL during the period beginning April 1, 2015 and ending December 31, 2018. According to the information provided by the banks, on October 18, 2019, a Look Out Circular was issued against Kapil and Dheeraj Wadhawan in order to prevent them from leaving the country. The UBI has made allegations that KPMG raised red flags about the diversion of cash under the guise of loans and advances to associated and interconnected organisations and people of DHFL and its directors throughout the course of their audit.

The examination of the account books revealed that 66 organisations that had commonality with DHFL founders were given a total of Rs 29,100 crore, of which Rs 29,849 crore was still owing to them. According to the allegations made by the bank, the majority of the transactions involving these businesses and persons took the form of investments in land and properties. It was discovered that the DHFL had, in a number of instances, disbursed funds within one month, redirected funds for investment in entities owned by Shetty, rolled over loans without NPA classification, had repayments worth hundreds of crores that were untraceable in bank statements, and had granted an unjustified moratorium on principal and interest.

Another significant amount that was still owed by DHFL was Rs 11,909 crore. This was due to the fact that the company had extended loans and advances totaling Rs 24,595 crore to 65 different organisations between April 1, 2015 and December 31, 2018. The DHFL and its promoters were also responsible for the disbursement of 14,000 billion rupees as part of project financing; nevertheless, they recorded this amount as part of their retail loan portfolio. Because of this, an inflated retail loans portfolio was created, which included 1,81,664 fake and non-existent retail loans with a total outstanding balance of 14,095 crore rupees. The loans that were managed in a separate database until they were eventually combined with the loans for other large projects were referred to as “Bandra Books” (OLPL).

“It was revealed that OLPL category was largely carved out of the aforesaid non-existent retail loans amounting to Rs 14,000 crore,” the document alleged. “Out of these Rs 14,000 crore, Rs 11,000 crore was transferred to OLPL loans, and Rs 3,018 crore was retained as a part of retail portfolio as unsecured retail loans.” They maintained that they were trying to de-stress the firm by different ways such as securitization of pool of housing loans, project loans, and disposal of promoters’ share in the company, but the DHFL, its directors, and its executives remained insisting that they were trying to do so. According to the allegations made by the bank, Kapil Wadhawan has continued to insist that DHFL has sufficient financial liquidity to last for six months and will continue to have a surplus of cash even after accounting for all payback commitments. After giving “false assurances” to lenders, the DHFL postponed interest payment responsibilities to terms loans in May 2019, and this practise persisted after the account was found to be non-performing assets, according to what they claimed.

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