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THE BIG BANK HEIST

HOW DHFL PROMOTERS ALLEGEDLY MISAPPROPR­IATED LOANS

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DHFL had been using Union Bank’s credit facilities since 1984. As of July 2020, 17 members in a Union Bankled consortium had sanctioned Rs 42,871.42 crore to DHFL. However, it started defaulting on the credit facilities since June 2019, and currently its account with the consortium lenders has been classified as NPA (non-performing asset) Union Bank, Andhra Bank and Corporatio­n Bank subscribed to DHFL nonconvert­ible debentures (NCDs) amounting to Rs 262 crore between 2016 and 2019. However, the NCDs too were not redeemed In its special audit report, KPMG said DHFL disbursed large amounts as loans and advances to a number of inter-connected entities and individual­s. Most of the transactio­ns were investment­s in land or properties

The report points to significan­t financial irregulari­ties, diversion of funds through related parties, fabricatio­n of books to show fraudulent nonexisten­t retail loans, roundtripp­ing of funds and utilisatio­n of diverted amounts to create assets by Kapil and Dheeraj Wadhawan and their associates

35 entities were disbursed loans to the tune of Rs 29,100.33 crore between April 2015 and December 2018. Of this, around Rs 29,849.62 crore was outstandin­g

Funds were diverted within a short span of one month in many cases, round-tripped for investment­s in NCDs/ preference shares of the promoter group entities, or loans were rolled over without classifyin­g the accounts as NPAs

Repayments to the tune of several crores of rupees were not traceable in bank account statements in a number of instances, and moratorium on principal and interest was given in a number of cases without adequate justificat­ion

DHFL and its promoters disbursed funds as project finance but reflected them as retail loans in their books. This led to the creation of an inflated retail loans portfolio, which had 181,664 false and non-existent retail loans of Rs 14,095 crore

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