DHFL audit firm TP Ostwal & Associates likely to come under scanner of SEBI, RBI after giving clean chit to company
KPMG, which carried out the forensic audit, has submitted a draft report to the lenders, which has reportedly found the DHFL promoters had diverted nearly Rs 20,000 crore to its related entities.
DHFL board had appointed the audit firm, TP Ostwal & Associates, soon after news portal Cobrapost unearthed DHFL promoters' alleged fund diversion
SEBI and the RBI will also approach another DHFL auditor, Deloitte, for its views
On 23 October, a forensic audit reportedly found massive fund diversion by the promoters and thus are averse to lend any additional money to the crippled company
The banking and securities markets regulators may ask the views of audit firm TP Ostwal & Associates that reportedly gave clean chit to DHFL in March this year to know how it gave the clean chit to the debt-laden company, said a media report.
The clean chit was given soon after a news portal claimed that Dewan Housing Finance Corporation's (DHF) promoters had allegedly diverted funds to the tune of about Rs 20,000 crore from the company.
DHFL board had appointed the audit firm, TP Ostwal & Associates, soon after the news portal, Cobrapost unearthed DHFL promoters' alleged fund diversion, said a report in Business Standard.
Market regulator Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) will also approach another DHFL auditor, Deloitte, which was the auditor of the crisis-hit home loan lender's between 2015 and 2019, for its views, the report said.
The audit reportedly found DHFL had disbursed loans and advances to inter-connected entities that appear to be linked to its promoters and repayments by 28 such entities worth Rs 12,541 crore are not traceable, according to KPMG’s special audit report, said a report in The Economic Times quoting banking officials in the know of the matter.
The report had found that loans and advances to the tune of Rs 24,594 crore were disbursed to 65 entities that had minimal operations and inadequate loan documentation, said the report.
On 23 October, a forensic audit reportedly found massive fund diversion by the promoters and thus are averse to lend any additional money to the crippled company.
The third-largest mortgage lender had sought a Rs 15,000-crore lifeline from the lenders as they finalise the resolution plan, which may also include picking up 51 percent equity in the company by converting their debt into equity.
KPMG, which has carried out the forensic audit has submitted a draft report to the lenders, which has reportedly found that the DHFL promoters had diverted nearly Rs 20,000 crore of bank loans to its related entities.
On 7 October, leading depository CDSL had frozen shareholding DHFL's promoters because of the delay in the announcement of the company's financial earnings.
The decision was taken after the company failed to announce its first quarterly results, they said.
In August this year, crisis-hit shadow bank DHFL said its board had approved a plan that included converting debt into equity, even as it seeks to sell assets and raise more capital.
The conversion of debt into equity may result in a change in ownership, the company said in a regulatory filing, adding that the plan still needed shareholder approval.
The rights allow the shareholder to buy more shares at a price below market value at a specified future period
Ficus used its clients' securities for settlement of its own pay-in obligations and has also transferred clients' securities to other entities or has pledged those securities to avail funds for itself, Sebi noted
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