India’s second-largest money lender Punjab National Bank (PNB) has issued a statement saying that Dewan Housing Finance (DHFL) cheated it with the applications for a total loan of Rs 3,600 crore. Dated 9 July, the exchange filing says: “A fraud of Rs 3688.58 crore in the NPA account of Dewan Housing Finance (DHFL) at Large Corporate Branch at Mumbai, Zonal Office, Mumbai. A fraud of Rs 3688.58 crore is being reported by the bank to RBI in the accounts of the company (DHFL).”
The Company Secretary Ekta Pasricha-undersigned filing mentioned further that the bank had already made provisions amounting to Rs 1246.58 crore as per prescribed prudential norms, which is in compliance with Sebi regulations.
Two years after a scam involving diamantaire Nirav Modi hit the PNB with by a massive Rs 13,000 crore non-performing asset, the bank declared DHFL cheated it too.
The Serious Fraud Investigation Office and Enforcement Directorate are already probing DHFL, which accumulated debt of close to Rs 85,000 crores, for money laundering and siphoning of funds.
As per the rules of the Securities and Exchange Board of India (SEBI), 100% provisioning is required in fraudulent accounts over a period of four quarters. PNB has made a provision of Rs 1,246 crore so far.
The State Bank of India (SBI) and Union Bank of India (UBI) have already declared DHFL a fraud account. Private lender IndusInd Bank has taken similar action against DHFL that has been involved in the case of fraud by Yes Bank’s previous head Rana Kapoor and his family.
DHFL has accumulated a debt of over Rs 85,000 crore and its promoter Kapil Wadhawan is believed to have laundered huge sums of money to cut a deal with gangster Iqbal Mirchi. The Ministry of Corporate Affairs has initiated a Serious Fraud Investigation Office (SFIO) probe into the company. The Enforcement Directorate is also probing the company.
DHFL is the first financial services company to be admitted to National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code for resolution under the newly introduced Section 227 of the Insolvency and Bankruptcy Code (IBC), 2016.
The RBI superseded the board of DHFL in November 2019 owing to governance concerns in the mortgage lender.
Meanwhile, the board of PNB approved a fundraising plan of approximately Rs 10,000 crore. The sum will help the bank hit capital markets in the fourth quarter of this financial year. This can meet the bank’s growth needs and regulatory requirements after the Oriental Bank of Commerce and United Bank of India merge into it.