Home / Companies / News /  MCA recommends fraud probe against DHFL

MUMBAI : In mounting trouble for the debt ridden Dewan Housing Finance Ltd (DHFL) the Ministry of Corporate Affairs (MCA) has recommended fraud probe against the Non Banking Finance Company (NBFC), said a government official.

This comes after a report by Registrar of Companies (ROC), Mumbai's initial probe report submitted last week to MCA.

"The report had found enough instances of fund diversion which merits a full investigation. Serious Fraud and Investigation Office (SFIO) will now probe for fraud in the diverted funds," said the official.

The alleged fund diversion at DHFL could be to the tune of 31,000 crore.

"Some of the alleged lapses also include missing details of repayment, which hints at the NBFC not sharing the entire information/ books for review," he added.

A fraud probe by a government agency puts the lenders recovery of dues of 38,342 crore in jeopardy. The lenders were working on a debt resolution process to convert their debt into equity but a fraud probe is likely to push this on the back burner.

A Mint story on 30 October said that the lenders 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.

This also puts the 100,000 DHFL depositors at risk as fraud probe will lead to freezing of any repayments.

A special audit commissioned by the lenders done by KPMG has pointed out that about 25 group companies to which DHFL had lent a total of 14,000 crore had an average profit of about 1 lakh, 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.


Jayshree P Upadhyay

Jayshree heads a team of reporters focussing on legal, regulatory, investigative stories. She has worked for over a decade, reporting on financial scams, legal stories and the intersection of corporate and regulatory issues. She is based in Mumbai and has previously worked with Business Standard, Mint, The Morning Context and Bloomberg TV India.
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