Cases

Probe Former DHFL Brass for Causing Rs. 40,000 Crore Loss to Lenders: Union bank

By 03/01/2022March 8th, 2022No Comments
DHFL loss to lenders

Probe former DHFL Loss to Lenders: Union Bank

CBI has been receiving requests from the Union Bank of India has written to it to effectively probe the promoters of Dewan Housing Finance Corporations. Other than the promoters, the Union bank has called from a probe in the management of the Dewan Housing Finance Corporation Ltd. The ultimate reason for calling such a probe is the fact that Dewan Housing Finance has caused a total loss of Rs 40,623.36 crores. What makes this debacle all the more concerning and debilitating is the fact that the loss was caused to the consortium of the bank, which is led by the Union Bank of India.

The basis of inquiry
The appeal to scrutinize dewan housing finance is based on the ultimate findings by the KPMG, the esteemed audit firm, that deviation of laid down norms and procedures have been committed seriously through manipulation of accounts and concealments. Dewan housing finance has been primarily accused of clandestine activities that were committed by it in terms of undisclosed bank accounts and misrepresentation.

dhfl lossgiven the seriousness of the claim at hand, the CBI has been actively probing the promoters namely Kapil and Dheeraj Wadhawan in the Yes Bank scam. According to the reports, given the pieces of evidence, there is a heavy case of fraud or loss of public money.

But even though the claims of the consortium of banks seem legitimate, the federal agency effectively and emphatically cannot register a fresh FIR. This is merely due to the fact that there is a need or a want of general consent which needs to be accorded by the Maharashtra government.

Last year, in the month of August, in the aftermath of the infamous probe into the Dewan Housing Finance debacle, attempts were made for the manipulation of television rating points (TRP), the state government had effetely withdrawn consent that had been accorded to the CBI.

This was done under Section 6 of the Delhi Special Police Establishment Act. Thus, given the turn of events that had taken place in the case last year, it was made mandatory that general consent is a must for the federal agency, namely CBI, to register an offense in the state, in its absence. Thus, in totality due to the events of the past, the federal agency now has to effectively approach the state government. This will help them get access to permission to conduct the investigation on a case-to-case basis.

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but is Maharashtra the only state to withdraw its consent? Apparently, many non-NDA governments, claiming serious vendetta by the center, have withdrawn their consent. These states mainly include Kerala, West Bengal, Rajasthan, Chhattisgarh, and Punjab.

The woes of the CBI have been aggravated as even after the portrayal, communication, and representation that has been effectively presented to the state government, consent hasn’t been still accorded. This brings to the forefront, the dreadfully awful state of the politics that tend to delay the process of recognition and effective addressal of the inconsistencies and corporate felonies at hand.

What makes this political deadlock all the more debilitating is the fact that the loss due to mismanagement and clandestine, illegal activities caused a loss of public money of over Rs 40,000 crores. Given the threat to social and public welfare, effective and immediate investigation is needed, which cannot go through due to the political deadlock.

To analyze the fraud, it is to be noted that the illegal tampering was found to have been conducted on a large scale as it was found that DHFL disbursed loans and advances totaling a total of Rs19,754 crores to 35 entities with commonalities to DHFL promoter. In fact, what made the whole process surreptitious and unnoticeable was due to DHFL promoters’ tight control of multiple entities. The control was so extensive that even the appointment of directors and auditors was carried out by the DHFL promoters.

It is no news that much of the debacle in the lending business is due to noncredit-worthy disbursement by the lender. The same was the case in the DHFL lending debacle, where it was found that humongous loans and advances to the tune of Rs 25,595 crores were disbursed to 65 entities that effectively and efficiently had various deficiencies.

These discrepancies and deficiencies included inadequate loan documentation and inadequate mortgage security valuation which form the very basis of the debacle. Similarly, to corroborate this claim, various loans can be found missing in the DHFL finance sheet that never made it back to the bank.

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in fact to cover up the surreptitious activities of the corporations, the “Bandra Book entity” had been created which effectively and wrongly maintained the details of non-existing retail loans. This was created using dummy names which were maintained in a separate accounting system.

Thus, in totality, it can be argued that the DHFL debacle brings to the forefront the fact that a strong regulatory environment is needed to end clandestine activities that are conducted craft fully under the authorities’ eyes.

 


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