DHFL lenders in a fix over debt recovery as govt likely to initiate SFIO probe
Under the proposed recast plan, lenders would take 51% stake in the company by converting a portion of DHFL’s debt into equityThis plan is being finalised under the 7 June stressed asset circular of the Reserve Bank of India
PremiumMUMBAI : Lenders to Dewan Housing Finance Corp Ltd (DHFL) are in a fix about the recovery of their exposure of ₹38,342 crore to the finance company as the government could initiate a probe by the Serious Fraud Investigation Office (SFIO).
Under the proposed recast plan, lenders would take 51% stake in the company by converting a portion of DHFL’s debt into equity. This plan is being finalised under the 7 June stressed asset circular of the Reserve Bank of India (RBI).
According to the chief executive of a public sector bank, once the investigative agency takes up the case, the proposed debt recast plan will take a back seat because it is unlikely that both can run simultaneously. “We will have to wait for the investigation to be over for implementation of any resolution plan. Only if the SFIO finds that there was no malafide intent on part of the promoters, can the restructuring deal work," the banker said on the condition of anonymity.
As on 6 July, the company’s total debt stood at ₹83,873 crore, of which ₹38,342 crore was owed to banks.
Mint reported on 22 October that about 25 group companies to which Dewan Housing Finance Ltd had lent a total of ₹14,000 crore had an average profit of about ₹1 lakh, a forensic audit of the company has found, raising suspicion that the mortgage lender may have diverted funds.
Out of the around ₹27,000 crore worth of loans raised by DHFL from banks for on-lending to home buyers, around ₹10,050 crore was invested in mutual funds, the findings of the audit revealed.
The draft report of the audit was shared with the members of DHFL’s committee of creditors (CoC). Mint reviewed parts of the 90-page report prepared by accounting firm KPMG.
On 23 October, DHFL’s board asked it to review the key observations from a draft audit report prepared by KPMG and respond in detail to the audit committee. The board also directed the company to share the responses with the lenders.
SFIO is a multi-disciplinary organisation under the Ministry of Corporate Affairs. It comprises experts in the field of accountancy, forensic auditing, banking, law, information technology, investigation, company law, capital market and taxation for detecting and prosecuting or recommending for prosecution white collar crimes and frauds.
News agency PTI reported on Tuesday the government will soon order an SFIO probe into alleged financial irregularities at debt-ridden mortgage firm DHFL after a report by the Registrar of Companies (RoC) indicated fund diversion. The news agency said the Mumbai office of the RoC earlier this year had initiated a detailed examination into alleged financial irregularities, including fund diversion, by DHFL promoters.
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