A whopping 2.6 lakh fake accounts in a Mumbai branch that did not exist. This is what investigations into the DHFL scam have revealed.

The ‘branch’ created fake accounts using names of account holders who had already repaid in full to siphon out ₹11,750 crore. Coding was done with the help of three software platforms to camouflage these transactions, according to probe documents seen by BusinessLine

Read also: DHFL: ‘91 fictitious entities from a Mumbai branch behind fraud’

 

Nearly 70 per cent of the ‘fraudulent transactions’ of DHFL flagged by the forensic auditor, Grant Thornton, are from this fictitious ‘Bandra-branch,’ the probe documents show.

No physical presence

“The Bandra-branch does not physically exist and is just a facade and cover-up created for giving effect for sanctioning and disbursal of loans by DHFL. Standard operating procedure was never followed by DHFL in loan disbursals to Bandra branch entities,” the documents note.

DHFL owes ₹83,873 crore to state-run institutions, mutual funds and retail bond holders. The Reserve Bank of India has initiated bankruptcy proceedings against it. Auditors probing DHFL have flagged fraudulent transactions of ₹17,394 crore by it in 10 years and legal proceedings are on against the company’s promoters and promoter entities including Kapil Wadhawan, Dheeraj Wadhawan, Township Developers India, Wadhawan Holdings, Dheeraj Township Developers, Wadhawan Consolidated Holdings among other related parties for siphoning of funds.

“Loan requests from Bandra branch were sent directly to the CMD, who gave email approvals for disbursal. For other genuine loans, the applications were uploaded in the company's request database, sent to underwriting departments, attracted due diligence and were finally approved by a committee. No such process was followed for Bandra-branch entities,” the documents reveal.

Based on the CMD emails, the Bandra branch accounts got direct fund transfers from DHFL’s treasury accounts with Axis Bank and Union Bank of India, which had standing instructions to transfer funds based on email communication. The ‘Bandra branch’ was hidden from regulatory surveillance, which was lax, the sources said.

Details were picked up randomly of client accounts that were closed but whose KYC was available in the company database, the probe documents reveal. This was for ever-greening of loan accounts without actual disbursement of funds but just for accounting purposes. It also generated fake revenues for the company.

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