Centre may order SFIO probe into DHFL for financial irregularities

In a major crackdown on financial irregularities, the government, on Tuesday is likely to order a Serious Fraud Investigation Office (SFIO) probe at the troubled mortgage firm Dewan Housing Finance Corporation (DHFL) soon, an official said to PTI. The Registrar of Companies, Mumbai office, has submitted its report on the non-banking financial company (NBFC) DHFL to the Ministry of Corporate Affairs a couple of days ago, an official said. 

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Centre to probe DHFL? 

"There is good enough reason to refer the matter of DHFL to Serious Fraud Investigation Office (SFIO)", the official said to PTI adding," the report indicates fund diversion and siphoning. The matter will be referred to the agency in the next few days, the official added.

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KPMG audit into DHFL

Earlier last week, a forensic audit conducted by KPMG confirmed the siphoning of funds from DHFL to a host of promoter-led entities. Reports state that KPMG was asked to conduct a special review of the finances of the company between April 2015- March 2019 to ascertain the loans taken by the NBFC and identify the diversion of funds.

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DHFL's liquidity crisis

Previously in January, reports had alleged DHFL had committed financial fraud through shell companies. The report has alleged that a total number of 32 Indian and foreign banks had lent a total of Rs. 97,000 crores to DHFL. While DHFL has been facing a liquidity crisis since September 2018, it has paid over Rs. 41,000 crores of its financial obligations, as per reports.

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But the troubles for India's fourth-largest housing finance company seem far from over. Reports state that the NBFC's draft debt resolution plan is to convert bank loans into a 51% equity stake for the lenders, while the remaining us retained by the promoters. Experts state that if KPMG's audit is proven true then there may be a change in management at DHFL.  

(with agencies inputs)