[ecis2016.org] The takeover will help Piramal Group to optimise its retail financial services business, with focus on the affordable housing finance segment
Nearly three months after his company received an approval by the insolvency tribunal to complete the takeover, billionaire Ajay Piramal has completed the takeover process of embattled Dewan Housing Finance Corporation (DHFL), Piramal Group said, on September 29, 2021. The pharma major has paid Rs 38,000 crores to the creditors of trouble-hit DHFL for the acquisition.
You are reading: Piramal Group completes takeover of embattled DHFL
In January 2021, the Piramal Group won the bid to acquire stressed DHFL after seeing stiff competition from its competitor, Oaktree Capital.
The company got approvals from the Reserve Bank of India (RBI) in February and the Competition Commission of India in April 2021. In June 2021, the Ajay Piramal-led Piramal Capital and Housing Finance received an approval by the Mumbai bench of the NCLT to acquire DHFL for Rs 37,250 crores.
The DHFL takeover by Piramal would enable the pharma major to optimise its retail financial services business, with focus on the affordable housing finance segment.
“We are very pleased to announce the consideration payment made towards the completion of this exciting acquisition. This accelerates our plans to become a leading, digitally-oriented, diversified financial services conglomerate that focuses on serving the financial needs of the unserved and underserved customers of our country,” said Ajay Piramal, chairman, Piramal Group.
“The combined entity will have 301 branches, 2,338 employees and over one million lifetime customers. We will be a dominant player in the fast-growing affordable housing segment,” Piramal added.
According to a statement by the company, there are 70,000 creditors of DHFL. Most of them are recovering nearly 46% of their dues through the completion of the DHFL resolution process. The successful completion of the acquisition by Piramal also makes DHFL the first financial services company in the country to be resolved under a special window of the insolvency code after the RBI, in November 2019, initiated the insolvency resolution procedure under the Insolvency and Bankruptcy Code (IBC).
Recall here that debt-ridden mortgage company DHFL, which was the third-largest pure-play mortgage lender till 2017, went bust in 2018 after it defaulted on its loans worth Rs 90,000 crores.
No end of trouble for DHFL owners
The Enforcement Directorate (ED), on September 28, 2021, provisionally attached assets worth Rs 578 crores belonging to Wadhawan Global Capital (UK) Ltd, a company owned by DHFL founders Kapil and Dheeraj Wadhawan, in the DHFL-Uttar Pradesh Power Corporation (UPPCL) fraud case. According to the charges levelled against the company by the ED, the owners had illegally invested the provident fund money of UP Power Corporation in DHFL. The provisional attachment has been made under the provisions of the Prevention of Money Laundering Act. Also, recall here that the Wadhawans are currently in judicial custody over their alleged involvement in the Yes Bank fraud case.
RBI approves DHFL’s takeover by Piramal Group
Bankrupt DHFL, could be on the verge of a turnaround, with the RBI approving Piramal Group’s takeover and resolution plan for the housing finance company
February 18, 2021: The Reserve Bank of India (RBI) has approved the takeover of debt-ridden Dewan Housing Finance Corporation Ltd (DHFL) by the Piramal Group. “We understand that the RBI has approved the DHFL resolution plan from Piramal Capital and Housing Finance, submitted by the committee of creditors,” the Piramal Group said, in a statement on February 18, 2021.
The approval comes after the Piramal Group, on January 15, 2021, won the bid to take over the bankrupt mortgage lender, receiving over 94% votes for its resolution plan from DHFL’s creditors. Other bidders in the fray included US-based Oaktree Capital and Adani Capital. Although Oaktree offered Rs 35,700 crores, Piramal’s bid of Rs 32,250 crores for DHFL included a higher upfront payment to creditors and infusion of equity. The resolution proposal will now be put before the National Company Law Tribunal (NCLT).
DHFL has been in the bankruptcy court since December 2019, after defaulting on Rs 90,000 crores of debt, following which its promoters were sent to jail on money laundering charges.
(Housing News Desk)
DHFL crisis: Fraudulent transactions of Rs 2,150 crores detected
DHFL has said that its auditor has detected fraudulent transactions worth Rs 2,150.84 crores
October 7, 2020: The auditor for debt-ridden Dewan Housing Finance Ltd (DHFL) has said that it has detected fraudulent transactions worth Rs 2,150.84 crores. Mortgage lender DHFL, on October 6, 2020, said that the fraud had been committed, by undervaluing the company’s insurance subsidiary, Pramerica Life Insurance Ltd. These transactions occurred, when DHFL sold its stake in Pramerica to DHFL Investments Ltd, during financial years 2016-2017 to 2018-19. DHFL, which is undergoing resolution under the Insolvency and Bankruptcy Code (IBC), enlisted Grant Thornton earlier in 2020, to investigate and audit the books of the company.
Yes Bank case: DHFL director Kapil Wadhawan booked for alleged criminal conspiracy
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The CBI has booked Yes Bank co-founder Rana Kapoor and DHFL promoter-director Kapil Wadhawan for alleged criminal conspiracy, cheating and corruption
March 9, 2020: The CBI has booked Yes Bank co-founder Rana Kapoor, DoIT Urban Ventures, a company allegedly held by his family members and DHFL promoter-director Kapil Wadhawan, for alleged criminal conspiracy, cheating and corruption, sources said on March 8, 2020. The agency has alleged that Kapoor, 62, entered into a criminal conspiracy with Wadhawan for extending financial assistance to DHFL through Yes Bank in return for substantial undue benefits to himself and his family members through companies held by them, they said.
According to the CBI FIR, the scam started taking shape between April and June, 2018 when Yes Bank invested Rs 3,700 crores in short-term debentures of the scam-hit Dewan Housing Finance Corporation Ltd (DHFL). In return, Wadhawan allegedly ‘paid kickback of Rs 600 crores’ to Kapoor and family members in the form of loan to DoIT Urban Ventures (India) Pvt Ltd, they said. DoIT Urban Ventures is held by Kapoor’s daughters – Roshini, Radha and Rakhee – who are 100% shareholders of the company through Morgan Credits Pvt Ltd, it alleged.
The loan of Rs 600 crores was sanctioned by DHFL to DoIT Urban Ventures (India) Pvt Ltd on the basis of mortgage of sub-standard properties having meagre value and by considering its future conversation from agricultural land to residential land, the agency has alleged. It was further found that DHFL had not redeemed the amount of Rs 3,700 crores invested by Yes Bank in its debentures till date, it said.
In addition to the above, Yes Bank also sanctioned a loan of Rs 750 crores to RKW Developers Pvt Ltd whose director is Dheeraj Wadhawan and is a DHFL Group company for their Bandra reclamation project, which was transferred by it to DHFL without any investment in the project for which it was sanctioned, they said.
The CBI had recently booked DHFL for siphoning of PF fund investments of Uttar Pradesh power sector employees in over Rs 2,200 crores scam. DHFL allegedly through layers of shell companies had siphoned off Rs 31,000 crores out of total bank loans of Rs 97,000 crores. The Reserve Bank of India (RBI), on March 5, 2020, had imposed a moratorium on the capital-starved Yes Bank, capping withdrawals at Rs 50,000 per account and superseded the board of the private sector lender with immediate effect. As per the RBI’s draft reconstruction scheme, State Bank of India will pick up 49% stake in the crisis-ridden Yes Bank under a government-approved bailout plan.
DHFL crisis: ED arrests CMD Kapil Wadhawan in money laundering case, alleges links with Iqbal Mirchi
The Enforcement Directorate has arrested the CMD of DHFL, Kapil Wadhawan, in connection with its money laundering probe against gangster Iqbal Mirchi
January 29, 2020: Dewan Housing Finance Ltd (DHFL) CMD Kapil Wadhawan, 46, was arrested by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA) and produced before the designated PMLA court, on January 27, 2020, which remanded him in the ED custody till January 29, 2020. At the end of his ED custody, Wadhawan was produced before special PMLA court judge P Rajvaidya, who extended his remand till January 31, 2020.
The case relates to Mirchi’s Mumbai properties, which have been called as proceeds of crime by the ED, and three such properties were sold to Sunblink Real Estate Pvt Ltd, a company linked to the Wadhawan brothers, Kapil and Dheeraj. The agency argued in the court that the proceed of the crime were ‘interconnected’. “It has been ‘diverted and layered’. We need to probe how deep it is going,” the central agency said. “Searches are going in relation to the case and we have received some digital evidence which needs to be confronted (with the accused),” the ED said, seeking further custody of the DHFL chairman and managing director (CMD).
The court accepted the agency’s arguments that Wadhawan’s remand was necessary, as he was aware of the transactions and payments made towards purchase of the three properties in Worli in central Mumbai, allegedly owned by deceased gangster Iqbal Mirchi.
Earlier, the ED, in its remand note, said: “Kapil Wadhawan, being chairman and managing director of Dewan Housing Finance Ltd (DHFL), had visited London along with a city-based real estate broker to meet Iqbal Mirchi in 2010. He has been instrumental in siphoning off huge amounts of money, as part of the illegal deal between Mirchi and the Wadhawans. Kapil Wadhawan played a very crucial role in the nefarious transactions by way of money laundering. He diverted huge funds from DHFL to shell companies, which was then transferred to Wadhawans-owned Sunblink Real Estate Pvt Ltd.”
The ED has filed a criminal case against Mirchi alias Iqbal Memon, his family and others to probe money laundering charges, for alleged illegal dealings in purchase and sale of costly real estate assets in Mumbai. Mirchi, who died in 2013 in London, was alleged to be the right hand man of global terrorist Dawood Ibrahim in drug trafficking and extortion crimes.
NCLT admits RBI petition for DHFL bankruptcy proceeding
The NCLT has admitted the RBI’s petition, to initiate insolvency proceedings against DHFL, making it the first financial services firm to be resolved through the bankruptcy code
December 3, 2019: Admitting the petition of the Reserve Bank of India (RBI), to initiate insolvency proceedings against Dewan Housing Finance (DHFL), a two-member National Company Law Tribunal (NCLT) bench of MK Shrawat and Chandra Bhan Singh, on December 2, 2019, said, “The petition deserves admission” without fixing the date for the next hearing. However, the bench was quick to add, “We are not saying it is a fit case or not but is there another point of view. This should not have a domino effect,” as this is the first financial services company coming up for debt resolution through the NCLT route.
Ravi Kadam, the counsel representing the RBI, said under Section 227 of the IBC (notified only on November 15), if the Reserve Bank found it necessary it could notify a financial institution for insolvency. DHFL owes Rs 92,715.45 crores to the system, including outstanding loans of Rs 73,833.46 crores and unsecured loans of Rs 18,882 crores as of November 2019, Kadam said.
When Kadam pointed out that under Rule 5 of Section 7 of the IBC, there was no requirement on the NCLT and the resolution professional to listen to the third-parties, when it comes to financial sector players, the bench, expressing concerns for small retail investors/depositors and other small litigants, quipped, “It should not be like the committee of creditors with maximum voting rights dominate small investors.”
RBI sends DHFL to NCLT for resolution
The RBI has sent crisis-ridden Dewan Housing Finance (DHFL) to the bankruptcy tribunal, making it the first NBFC/HFC to go for bankruptcy resolution
November 29, 2019: The Reserve Bank of India (RB), on November 29, 2019, sent the crippled Dewan Housing Finance (DHFL) to the bankruptcy tribunal, making it the first NBFC/HFC to be resolved under the Insolvency and Bankruptcy Code (IBC). The central bank also said there will an interim moratorium on the lender, between the date of filing of the bankruptcy application and its admission or rejection.
DHFL to face insolvency, as RBI sacks board and appoints administrator
Dewan Housing Finance (DHFL) is set to become the first NBFC to face insolvency proceedings, with the RBI superseding its board and placing the crisis-hit lender under an administrator
November 22, 2019: Within days of the government empowering it to refer stressed shadow banks to insolvency courts, the Reserve Bank of India (RBI), on November 20, 2019, placed crippled Dewan Housing Finance (DHFL) under an administrator and said the resolution process for the lender would begin shortly. The Mumbai-headquartered pure-play mortgage lender becomes the first NBFC/HFC to go for bankruptcy resolution. On November 15, 2019, the government had notified Section 227 of the IBC, empowering the RBI to refer financial sector players like NBFCs and HFCs but excluding banks, with assets worth at least Rs 500 crores, to insolvency courts.
“The RBI has decided to supersede the board of DHFL, owing to governance concerns and defaults in meeting various payment obligations,” the central bank said, in the order. The RBI also appointed Indian Overseas Bank’s former managing director R Subramaniakumar, as its administrator. “We also intend to shortly initiate the process of resolution of DHFL under the Insolvency and Bankruptcy Code and would also apply to the NCLT, seeking appointment of the administrator as the insolvency resolution professional,” the RBI statement added.
DHFL informed the exchanges about the RBI order, issued under Section 45 IE of the RBI Act, 1934. “The statutory inspection of DHFL conducted by the National Housing Bank under Section 34 of the NHB Act of 1987, revealed serious deterioration in its financial position,” DHFL informed exchanges quoting the RBI order. As of July 2019, the beleaguered home financier owes Rs 83,873 crores to banks, the National Housing Board, mutual funds and bondholders/retail bondholders. Of this, secured debt is Rs 74,054 crores and Rs 9,818 crores is unsecured.
Following this, the RBI, on November 22, 2019, constituted a three-member panel to advise the administrator of DHFL. IDFC First Bank’s non-executive chairman Rajiv Lall, ICICI Prudential Life Insurance’s managing director and chief executive NS Kannan and mutual funds’ association AMFI’s chief executive NS Venkatesh, would be part of the panel, an official statement said.
Bombay HC restrains DHFL promoters from going abroad
The Bombay HC has restrained crisis-hit DHFL’s promoters Dheeraj Wadhawan and Kapil Wadhawan from going abroad, in a case pertaining to Rs 200 crores owed to 63 Moons Technologies
November 8, 2019: The Bombay High Court, on November 7, 2019, restrained Dewan Housing Finance Corporation Ltd (DHFL) promoters Dheeraj Wadhawan and Kapil Wadhawan from leaving the country. The order came on a petition filed by 63 Moons Technologies, seeking recovery of dues of around Rs 200 crores from DHFL. Justice SJ Kathawalla said the Wadhawans will have to seek permission from the high court, if they wish to leave the country.
After the court passed the order, the DHFL counsel submitted a statement in the afternoon session that the Wadhawans will not leave the country before November 14, 2019. The court was hearing a plea filed by Jignesh Shah-promoted 63 Moons Technologies, for recovery of around Rs 200 crores which it said were due from mortgage lender DHFL. 63 Moons, which had subscribed to non-convertible debentures (NCD) of DHFL, approached the court after the latter failed to repay the money. DHFL has challenged the maintainability of the petition, arguing that trustees of bond-holders have already filed an application before the Pune bench of the Debt Recovery Tribunal (DRT), for recovery of dues on behalf of debenture-holders and so, this petition was redundant.
NHB’s exposure in Dewan Housing Finance at Rs 24.35 billion
NHB’s exposure in DHFL and PMC Bank at the end of March 2019, stood at Rs 24.35 billion and Rs 1.75 billion, respectively, India Ratings has said
October 10, 2019: National Housing Bank (NHB), the principal agency that promotes housing finance institutions in India, has an exposure of Rs 24.35 billion in crisis-hit DHFL, as on March 2019, a rating agency said. “NHB’s exposure in Dewan Housing Finance Ltd (DHFL) and Punjab and Maharashtra Cooperative (PMC) Bank stood at Rs 24.35 billion and Rs 1.75 billion, respectively, at end-March 2019, both of which were standard accounts as on end-June,” India Ratings said in a note, on October 9, 2019.
The bank’s asset quality was significantly robust, despite the concentration of HFCs and commercial banks in its loan portfolio, it said. NHB made 15% provisioning in the 2018-19 fiscal as a prudent measure, though DHFL was a standard account as on June, the note said. There was a further recovery of Rs 4.2 million during FY19 and no fresh slippages, the rating agency said. National Housing Bank’s gross NPA ratio was flat at 0.01% in FY19 as compared to the previous fiscal. It also increased provisioning on standard assets to Rs 4,044 million in the last fiscal (FY18 was Rs 269 million), which lowered the return on average total assets to 1.06%.
DHFL seeks Rs 15,000-crore lifeline
Crisis-hit Dewan Housing Finance (DHFL) has sought immediate funding of Rs 15,000 crores, from banks, to fund viable projects that are stuck due to lack of money
August 12, 2019: Troubled mortgage lender Dewan Housing Finance (DHFL) has sought Rs 15,000 crores of immediate funding from banks, for on-lending to retail customers, as well as to project developers, say sources. Last week, the nearly crippled company had submitted a draft resolution plan to lenders, which is yet to be approved by them. “The company has asked for an additional funding of Rs 15,000 crores. The money will be used to fund viable projects that are stuck due to lack of money,” said one of the sources.
When contacted, a DHFL spokesperson said it did not have any comment to offer, apart from what it has informed the stock exchanges last week on the draft resolution plan. Under the draft resolution plan, the company has asked for funds from banks/NHB, for restarting retail funding which was stopped after the liquidity crisis hit it, late in 2018. According to sources, the decision on any additional funding or the quantum of funding, will be taken only after due deliberations by lenders.
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The beleaguered home financier, which has defaulted on multiple times on payment to bondholders since June 2019, owes close to Rs 90,000 crores to banks, the National Housing Bank (NHB) and other creditors. In July 2019, lenders had signed an inter-creditor agreement (ICA), as mandated by the Reserve Bank in the new NPA resolution/recognition framework effective June 7, 2019. In a separate filing to exchanges on August 8, 2019, DHFL said it may not be able to meet its financial obligations in the near future. “Given the ongoing discussions on the resolution plan with the lenders who have signed the ICA, we believe that our payment obligations, falling due in the immediate future, may not be met as per their existing schedule,” the company informed the exchanges.
DHFL crisis: CRISIL downgrades company’s commercial papers to ‘default’ grade
Rating agency CRISIL has downgraded the commercial papers of Dewan Housing Finance Corporation Ltd (DHFL), citing delays in debt servicing
June 6, 2019: CRISIL has downgraded the commercial papers (CP) of troubled housing finance firm, Dewan Housing Finance Corporation Ltd (DHFL), to ‘D’ (Default) from ‘A4+’, it said in a release, on June 5, 2019. DHFL has Rs 850 crores of outstanding CPs, of which Rs 750s crore is due in June, the rating agency said. “The first CP maturity is on June 7, 2019. With liquidity inadequate, as on date to service debt and visibility very low on timely fund raising, CRISIL expects the CP to be in default on maturity,” the release said.
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The downgrade comes after reports of default by the company in paying interest to the tune of Rs 900-1,000 crores of NCDs, which were due on June 4, 2019. “The downgrade reflects delays in debt servicing by DHFL on some of its non-convertible debentures (NCDs) not rated by CRISIL, because of inadequate liquidity. The payments were due on 4 June,” CRISIL said. DHFL officials were unavailable for comment. In May 2019, too, CRISIL had downgraded its rating on DHFL’s commercial papers to ‘A4+’ from ‘A3+’, citing more-than-expected reduction in the company’s liquidity.
DHFL curbs premature withdrawals of deposits, amid liquidity woes
As a fallout of a downgrade of its rating, Dewan Housing Finance Corporation Ltd has been forced to stop accepting fresh deposits and also restrict premature withdrawal of existing deposits, except in certain cases
May 22, 2019: Cash-starved Dewan Housing Finance Corporation Ltd (DHFL) has decided to restrict premature withdrawal of deposits and stop accepting fresh deposits, as part of reorganising its ‘liability management’ efforts, sources said. “In view of the recent revision in the credit rating of our fixed deposit programme, acceptance of all fresh deposits, as well as renewals, have been put on hold with immediate effect. Further, to help us reorganise our liability management, the premature withdrawal of deposits has also been put on hold. This is completely under NHB regulation,” one of the sources said.
[ecis2016.org] RBI to create specialised cadre for regulation of banks and NBFCs
National Housing Bank (NHB) norms do not allow companies to raise deposits, if they do not have an investment grade rating. According to the sources, the company will continue to honour its all premature deposit withdrawal requests, in cases such as medical or financial emergency, provided the customers produce valid documents. “Over the last few weeks there have been several unwarranted speculation in the market about the creditworthiness of DHFL and the company stands committed to honour all its liability payments,” one of the sources said.
The company has cleared liabilities of nearly Rs 30,000 crores since September 2018, the sources added. For the past eight months, non-banking financial companies (NBFCs) have been reeling under a liquidity crunch, against the backdrop of debt defaults by IL&FS Group companies and others. On May 10, 2019, DHFL clarified on unwarranted speculation in the market about continuous weakening of the company’s credit profile. “We would like to place on record that the slowdown in business activity in the industry, has not had any adverse impact on DHFL’s debt repayment ability or loan servicing and collections of the company,” it had said. From a servicing standpoint, collection efficiency has remained over 99% every month, since September 2018, DHFL had said.
Congress demands independent, time-bound probe into allegations against DHFL
Following allegations of diversion of funds to the tune of Rs 31,000 crores by DHFL, the Congress has demanded an independent and time-bound probe into the alleged irregularities by the non-banking finance company
January 31, 2019: The Congress, on January 30, 2019, demanded an independent, time-bound probe into allegations of irregularities by non-banking finance company Dewan Housing Finance Corporation Limited (DHFL), in the name of slum development and rehabilitation in Maharashtra. Congress spokesperson Priyanka Chaturvedi asked why the RBI, SEBI and the Finance Ministry are not initiating an investigation, into the alleged ‘scam’ involving ‘siphoning of Rs 31,000 crores’.
“The Congress demands an independent investigation of the charges that have been revealed through this expose and an explanation to the country as to how such a huge financial scam has been once again ignored by the Ministry of Finance,” she said, referring to the ‘sting’ by a website. “Why is it that the government of India continues to pressurize the RBI to lend money to NBFCs, by totally absolving transparency and accountability from these NBFCs?” she asked. She alleged that the NBFCs have a mind-boggling banking exposure of over Rs 97,000 crores to 32 Indian public and private banks.
“DHFL has routed Rs 31,000 crores of public funds through dozens of ‘shell companies’, for ‘personal gains’, information of which is easily available on public platforms and government websites,” she alleged. “In the name of ‘slum development’ and ‘slum rehabilitation’ in Maharashtra, 45 of these so called ‘shell companies’ were given loans worth a total of Rs 14,282 crores, without any security and ignoring necessary investigations, hence, leading to creating ‘private wealth’ in India and abroad,” she alleged.
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“The main partners of DHFL formed dozens of shell companies to execute this ‘well planned scam’ and divided these companies into groups, some of which were registered under the same address, with the same group of directors,” the Congress spokesperson alleged. “However, the icing on the cake is the donation of about Rs 20 crores given by the promoters to Bharatiya Janta Party through these shell companies,” she claimed. “Why is it that the donation records of the BJP do not share the PAN details of these companies as mandated by the Election Commission of India,” she further asked.
Former FM Yashwant Sinha seeks probe into alleged Rs 31,000-crore fund diversion by DHFL
Former finance minister Yashwant Sinha has demanded a probe into the alleged diversion of loans worth Rs 31,000 crores by DHFL that the company raised from state-owned banks including SBI and Bank of Baroda
January 30, 2019: According to a Cobrapost expose, Dewan Housing Finance Corporation Limited (DHFL), through layers of shell companies, allegedly siphoned off Rs 31,000 crores, out of total bank loans of Rs 97,000 crores. After the details of the expose were revealed, former finance minister Yashwant Sinha demanded an immediate investigation. “If the government fails to order an immediate investigation into the allegations, into the aspects including political funding, it would raise a question mark on the intent of the government. Therefore, I demand investigation under court supervision, by a special investigative team,” Sinha said.
DHFL, in a statement, said the company is a publicly listed housing finance company and is regulated by the National Housing Bank (NHB) and the Securities and Exchange Board of India (SEBI), amongst other regulators. “This mischievous misadventure by Cobrapost appears to have been done with a mala fide intent, to cause damage to the goodwill and reputation of DHFL and resulting in erosion in shareholder value,” the statement said. The real intent of this exercise appears to be to destabilise the company and the market equilibrium, besides hampering to meet the ongoing obligations, it said.
Sinha also said the exposes raise question marks on the claims of the government, of nailing down of lakhs of shell companies. All the agencies including regulators of the government, have failed to track nefarious deals, he said. Citing exposes, he alleged that political donations were received by a political party.
[ecis2016.org] FM asks public sector banks to increase lending to MSME, agriculture and housing sectors
The exposes alleged that the scam has been pulled off, mainly by sanctioning and disbursing astronomical amounts in secured and unsecured loans to dubious shell/pass-through companies, related to DHFL’s own primary stakeholders Kapil Wadhawan, Aruna Wadhawan and Dheeraj Wadhawan, through their proxies and associates, which have in turn passed the money on to companies controlled by the Wadhawans. “The money has been used to buy shares/equity and other private assets in India and abroad, including in countries like the UK, Dubai, Sri Lanka and Mauritius,” it said.
In a statement, the company said that DHFL was a responsible and law-abiding corporate citizen and all loans were disbursed in the normal course of business, in accordance with industry best practices and in compliance with all regulatory norms. “The company’s financial statements are submitted to the stock exchanges and are in the public domain. DHFL and its group companies are confident of meeting any scrutiny on any aspect of our operations and will pursue these frivolous allegations to its logical conclusion,” it added. DHFL has a strong corporate governance regime and has received AAA credit rating from leading credit agencies. The company is fully tax-compliant and its books are audited by global auditors, it added.
Senior lawyer and activist Prashant Bhushan said, “If the banks had done a little due diligence, they would have known that the loans given to DHFL have been virtually siphoned out by shell companies. Therefore, it is absolutely clear that various people in many public sector banks are involved in the scam.”
The exposes claimed that by lending to shell/pass-through companies without due diligence, DHFL has ensured that the recovery of such dubious loans is impossible, since the companies or their directors themselves do not own any assets. This way the private assets acquired by the Wadhawans and their associates, by using the funds from these dubious loans, are completely ring-fenced from any recovery process that may be initiated by the authorities under the SARFAESI Act or Insolvency and Bankruptcy Code of India, it claimed.
“Thus, the only losers in the process would be the public sector banks, such as State Bank of India and Bank of Baroda, with an exposure of over Rs 11,000 crores and Rs 4,000 crores, respectively, foreign banks and shareholders from among the public, or investors of DHFL,” it alleged.
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