As India’s biggest bank fraud is unearthed, a look at the DHFL case and other big bank frauds in the country

The CBI has booked former CMD Kapil Wadhawan and director Dheeraj Wadhawan of Dewan Housing Finance Ltd (DHFL) in the “biggest” banking fraud in India. A total of 13 accused have been arrested for defrauding a consortium of 17 banks of Rs 34,615 crore. The action came on a complaint from the Union Bank of India (UBI), leader of a 17-member lender consortium which had extended credit facilities to the tune of Rs 42,871 crore between 2010 and 2018. What is the DHFL case? The UBI has alleged that Kapil and Dheeraj Wadhawan in criminal conspiracy with others misrepresented and concealed facts, committed criminal breach of trust and abused public funds to cheat the consortium to the tune of Rs 34,614 crore by defaulting on loan repayments from May 2019 onwards. The audit of DHFL account books showed that the company allegedly committed financial irregularities, diverted funds, fabricated books, and round tripped funds to “create assets for Kapil and Dheeraj Wadhawan” using public money. The DHFL loan accounts were declared non-performing assets at different points of time by lender banks. When DHFL was hit by investigation in January 2019 after media reports on allegations of siphoning of funds surfaced, the lender banks held a meeting on 1 February, 2019 and appointed KPMG to conduct a “special review audit” of DHFL from 1 April, 2015 to 31 December, 2018. The UBI has alleged that KPMG, in its audit, red-flagged diversion of funds in the garb of loans and advances to related and interconnected entities and individuals of DHFL and its directors. The scrutiny of account books showed that 66 entities having commonalities with DHFL promoters were disbursed Rs 29,100 crore against which Rs 29,849 crore remained outstanding. Another major outstanding in DHFL accounts was Rs 11,909 crore arising out of loans and advances worth Rs 24,595 crore given to 65 entities between 1 April, 2015 and 31 December, 2018. The DHFL and its promoters also disbursed Rs 14,000 crore as Project Finance but reflected the same as retail loans in their books. “This led to creation of inflated retail loans portfolio of 1,81,664 false and non-existent retail loans aggregating Rs 14,095 crore outstanding. The DHFL, its directors and executives kept maintaining that they were trying to de-stress the company through various means like securitization of pool of housing loans, project loans, divestment of promoters’ stake in the company, they said. Kapil Wadhawan continued to maintain that DHFL has six months of cash liquidity and would remain cash surplus even after considering all repayment obligations, the bank alleged. After having “falsely assured” lenders, the DHFL delayed interest payment obligations to terms loans in May 2019 which continued thereafter with accounts declared non-performing assets, they said. Other major bank frauds in India ABG Shipyard has been accused of defrauding a consortium of banks led by ICICI Bank, IDBI Bank and SBI of Rs 22,842 crore over a period of five years. The CBI said that the account of ABG Shipyard was declared a non-profitable asset (NPA) in 2013. The CBI has booked ABG Shipyard Ltd and its former chairman and managing director Rishi Kamlesh Agarwal along with others for the fraud. Diamond trader Nirav Modi and his uncle Mehul Choksi were accused of allegedly defrauding Punjab National Bank of nearly Rs 14,000 crore. Modi and his relatives escaped India in early 2018, days before the news of the scam became public. Business tycoon Vijay Mallya is accused of defaulting over Rs 10,000 crore from more than a dozen Indian banks after his venture Kingfisher Airlines Lt failed in 2013. According to Business Standard, Mallya left the country on 2 March, 2016, the day a clutch of public-sector banks moved the Debt Recovery Tribunal against him. In January 2019, he was declared a fugitive economic offender under the Fugitive Economic Offenders Act. In the Bank of Baroda foreign exchange scam, loopholes in the remittance rules to bring back illegal money from abroad were exploited. According to CNBC TV18, the scamsters transferred money to Hong Kong claiming that to be advance payments to vendors. Employees of various banks including Oriental Bank of Commerce and Bank of Baroda were allegedly party to the scam that amounted to over Rs 6,000 crore. In September 2019, the Reserve Bank of India discovered that PMC Bank had allegedly created fictitious accounts to hide over Rs 4,355 crore of loans extended to Housing Development and Infrastructure Limited which was at the time almost bankrupt. With inputs from agencies Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.