The CBI has charged former promoters of Dewan Housing Finance Corporation Ltd (DHFL), Kapil Wadhawan and Dheeraj Wadhawan, along with 12 other people in the largest-ever loan fraud case in India with cheating a group of 17 banks out of more than Rs 34,000 crore. Up till recently, the largest frauds were the PNB loan fraud (13,000 crore rupees) and the ABG Shipyard loan fraud (20,000 crore rupees).
CBI DHFL Fraud: Loan by Wadhawans
According to sources, the government is searching buildings connected to the accused at 11 different locations across the nation.
Union Bank of India (UBI), the consortium’s principal bank, filed a complaint that led to the CBI case being opened. The UBI complaint claims that since 2010, the DHFL has granted the consortium credit facilities totaling over Rs 42,000 crore, of which Rs 34,615 crore are still unpaid. In 2019 the loan was deemed non-performing, and in 2020 fraud.
“large amounts were disbursed as loans & advances by the borrower company to a number of inter-connected entities and individuals with commonalities to DHFL Promoter Entities, which were used for purchase of shares/debentures,” according to a forensic audit of DHFL loan accounts performed by KPMG in 2020–2021.
The majority of these entities’ and individuals’ transactions, according to the KPMG research, were investments in real estate.
The CBI has also detained Sudhakar Shetty of the Suhana Group and ten other real estate firms in addition to Wadhwans.
The UBI has alleged that the KPMG audit indicates “significant financial irregularities, diversion of funds through related parties, fabrication of books to show fraudulent non-existent retail loans, round tripping of funds and utilization of diverted amounts for creation of assets by Sh. Kapil Wadhawan, Sh. Dheeraj Rajesh Kumar Wadhawan and their associates.”
KPMG audits claim that 66 entities connected to the DHFL and the Wadhawan family received loans worth close to Rs 30,000 crore by breaking all rules.
According to the CBI FIR, out of these 65 entities, Kapil Wadhawan alone allegedly had control over about 40 of them through the appointment of directors and auditors, handling income tax notices, maintaining secretarial records of these entities, and managing overall control over their financial operations.
Beginning in May 2019, the DHFL stopped making its debt payments. However, a lot of NBFC companies had difficulties raising money much earlier since IL&FS Group concerns had broken their agreements. The share price of DHFL then experienced a significant correction. As banks raised concerns about the company’s financial stability, Wadhawans asserted that the share price decline was caused by one of its investors selling commercial papers. They also insisted that the DHFL held a strong level of liquidity equivalent to six months of cash and would continue to have a cash surplus even after taking into account all repayment obligations for the Financial Year 2018–19. According to the FIR, these guarantees turned out to be false.
Since the company’s demise in 2019, the Wadhawans have been the subject of numerous CBI and Enforcement Directorate investigations. They were also previously detained in the Yes Bank case.