Money & Banking

DHFL: ‘91 fictitious entities from a Mumbai branch behind fraud’

Our Bureau Mumbai | Updated on September 20, 2020 Published on September 20, 2020

Grant Thornton report says fraud through 91 fictitious entities operating from a Mumbai branch

A forensic investigation carried out by Grant Thornton into the affairs of Dewan Housing Finance Corporation Ltd has revealed that DHFL was siphoning off funds since 2006-07 through 91 fictitious entities operating from a Mumbai branch.

The forensic report has been submitted to the National Company Law Tribunal’s Mumbai Bench. The report reveals fraud of ₹14,000 crore in DHFL’s books, including ₹9,320 crore in the wholesale book, ₹1,707 crore loss in the SRA (Slum Redevelopment Authority) book and ₹3,000 crore of fund diversion in retail loans, said sources close to the development. According to the report, the recovery of these loans is doubtful.

The Administrator of DHFL, named under the IBC, had appointed Grant Thornton to investigate the goings-on in the company.

According to a report prepared by the auditor, the transactions concerned occurred from 2006-07 to 2018-19.

On August 23, DHFL reported a net profit of ₹70.1 crore for the quarter ended June 30, 2020, but its auditors had once again flagged that the company’s ability to remain a “going concern” would depend on its resolution process.

Insolvency process

Last November, DHFL became the first financial sector company in the country to be taken into the corporate insolvency process.

The the disclosures of the forensic audit, it is feared, could further delay the insolvency process. Lenders could extend the date for submission of financial bids until there is more clarity on the alleged frauds. So far, players including the Adani Group, KKR, Bain Capital and Oaktree Capital have shown interest in buying DHFL

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on September 20, 2020
This article is closed for comments.
Please Email the Editor