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The Hindu
4 days ago
- Business
- The Hindu
DHFL case: SEBI bans Kapil, Dheeraj Wadhawan, 4 others from market; imposes ₹120 crore fine
Markets regulator SEBI has banned Dewan Housing Finance Corp Ltd's former CMD Kapil Wadhawan, ex-director Dheeraj Wadhawan, and four others from the securities markets for up to five years and imposed a penalty totalling ₹120 crore on them for diverting funds and fabricating books. Additionally, they have been restrained from holding any key position in a listed company for up to five years. Apart from Kapil and Dheeraj, restraints have been imposed on Rakesh Wadhawan, who was non-executive chairman, Sarang Wadhawan, a former non-executive director, Harshil Mehta, who was joint managing director and CEO, and Santosh Sharma, a former CFO. Also, the Wadhawans were the promoters of the housing finance company. In its 181-page order passed on Tuesday, SEBI noted that since 2006, DHFL, along with its promoters, directors, and key managerial personnel, have engaged and participated in an "egregiously fraudulent scheme" to divert funds to "Bandra Book Entities" (BBEs) linked to the promoters. By March 31, 2019, DHFL's loans to BBEs stood at ₹14,040.50 crore. The BBEs were directly or indirectly connected to Kapil, Dheeraj Rakesh and Sarang, it added. As per the order, promoters issued huge unsecured loans to these entities despite their lack of assets or business, bypassing all due diligence, and falsely recording them as retail housing loans. The regulator found that the fraud operated in several large unsecured loans were extended to these BBEs even though they had no net worth, assets, or cash flows to justify such exposure. Second, all standard loan appraisal processes were deliberately bypassed. Third, these weak intercorporate loans to related parties were misrepresented as retail housing loans, creating a false impression of the company's financial health for investors and other stakeholders. "To effect this elaborate deception, a fake virtual branch ('Bandra branch') and previously closed retail loan accounts were employed, alongside three different accounting software, camouflaging the BBE loans as retail housing loans. In the initial years, well over 30 per cent of all loans of DHFL were to these BBEs," SEBI noted. Despite the BBEs not making interest or principal payments, DHFL booked fictitious interest income, which allowed it to show increasing profits instead of losses between FY 2007-08 and FY 2015-16. These financials misled shareholders and distorted DHFL's share price. According to SEBI, the main orchestrators of the fraudulent scheme were Kapil and his brother Dheeraj. Further, Rakesh and Sarang Wadhawan were also involved through their roles on DHFL's board. The investigation found that loans worth ₹5,662.44 crore were disbursed to 39 BBEs, of which 40% was subsequently routed to 48 other entities connected to the promoters. Accordingly, SEBI has prohibited Kapil and Dheeraj from the securities markets for five years; while Rakesh and Sarang face a four-year ban; and Mehta and Sharma have been prohibited for three years. During these periods, they cannot access the securities market, deal in securities in any manner, or hold any role such as director or key managerial personnel in listed companies, registered intermediaries, or public companies intending to raise funds from the market. Kapil and Dheeraj have each been fined ₹27 crore, while Rakesh and Sarang face penalties of ₹20.75 crore each. Mehta has been ₹11.75 crore, and Sharma faces a total penalty of ₹12.75 crore. In September 2020, the regulator passed an interim order and imposed several restrictions on them.
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Business Standard
4 days ago
- Business
- Business Standard
Sebi bans Wadhawan brothers for five years in DHFL fund diversion case
The Securities and Exchange Board of India (Sebi) has barred promoters Kapil Wadhawan and Dheeraj Wadhawan for five years from the securities market for alleged fund diversion from Dewan Housing Finance Corporation (DHFL). The former promoters have also been prohibited from holding any key position in a listed company. The ban on Rakesh Wadhawan and Sarang Wadhawan is for four years each, while former Chief Executive Officer and Joint Managing Director Harshil Mehta and former Chief Financial Officer Santosh Sharma have been debarred for three years each. Sebi has imposed a total penalty of Rs 120 crore on all of them, with Kapil and Dheeraj each fined Rs 27 crore—the highest among the penalties. The regulator alleged their involvement in a fraudulent scheme under which loans were disbursed to 87 'Bandra Book Entities' (BBEs) connected to each other and to the DHFL promoter group. Sebi noted that 39 BBEs, which received Rs 5,662.44 crore from DHFL, transferred 40 per cent of this amount into 48 companies linked to the DHFL promoters. As of March 2019, the net outstanding loans to BBEs totalled Rs 14,040 crore. The regulator said these large unsecured loans to related parties with extremely weak financials were 'blatantly mischaracterised' as retail housing loans. 'The disguised nature of the BBE loans also delayed regulatory intervention and eventually threatened market stability,' said Sebi Whole-Time Member Ananth Narayan. Sebi will determine the quantum of illegal gains or benefits from the scheme and may take further action. It added that, had DHFL presented accurate financial statements and excluded 'fictitious' interest income from loans to BBEs, the company would have reported losses every year between FY2007–08 and FY2015–16. Instead, it continued to post profits. 'To effect this elaborate deception, a fake virtual branch ('Bandra branch') and previously closed retail loan accounts were employed alongside three different accounting software systems, camouflaging the BBE loans as retail housing loans. In the initial years, well over 30 per cent of all loans of DHFL were to these BBEs,' the order said. Sebi noted that the publication of false financials misled stakeholders and compromised the integrity of share price discovery, inducing investors to remain invested under the belief that 'all was well' at DHFL. An interim order in the matter had been passed by Sebi in September 2020, imposing initial restraints.
News18
4 days ago
- Business
- News18
Sebi bans DHFLs Kapil Wadhawan, Dheeraj Wadhawan, 4 more from securities market
New Delhi, Aug 12 (PTI) Markets regulator Sebi on Tuesday barred Dewan Housing Finance Ltd's former CMD Kapil Wadhawan, ex-director Dheeraj Wadhawan, and four others from the securities markets for up to five years for committing financial irregularities, diverting funds, and fabricating books. The others who have been prohibited by Sebi are — Rakesh Wadhawan, who was non-executive chairman, Sarang Wadhawan, a former non-executive director, Harshil Mehta, joint managing director & CEO, and Santosh Sharma, a former CFO. Sebi also fined the six individuals Rs 120 crore. Kapil Wadhawan and Dheeraj Wadhawan have each been restrained from the securities markets for five years, while Rakesh Wadhawan and Sarang Wadhawan face a four-year ban, and Harshil Mehta and Santosh Sharma have been prohibited for three years, according to the Sebi order. During these periods, they cannot access the securities market, deal in securities in any manner, or hold any role such as director or key managerial personnel in listed companies, registered intermediaries, or public companies intending to raise funds from the market. Kapil Wadhawan and Dheeraj Wadhawan have each been fined Rs 27 crore, while Rakesh Wadhawan and Sarang Wadhawan face penalties of Rs 20.75 crore each. Harshil Mehta has been fined Rs 11.75 crore, and Santosh Sharma faces a total penalty of Rs 12.75 crore. In its 181-page order, Sebi noted that since 2006, DHFL, along with its promoters, directors, and key managerial personnel, have engaged and participated in an 'egregiously fraudulent scheme" to divert funds to 'Bandra Book Entities" (BBEs) linked to the promoters. By March 31, 2019, DHFL's loans to BBEs stood at Rs 14,040.50 crore. The BBEs were directly or indirectly connected to Kapil, Dheeraj Rakesh and Sarang, it added. As per the order, promoters issued huge unsecured loans to these entities despite their lack of assets or business, bypassing all due diligence, and falsely recording them as retail housing loans. The regulator found that the fraud operated in several steps. First, large unsecured loans were extended to these BBEs even though they had no net worth, assets, or cash flows to justify such exposure. Second, all standard loan appraisal processes were deliberately bypassed. Third, these weak intercorporate loans to related parties were misrepresented as retail housing loans, creating a false impression of the company's financial health for investors and other stakeholders. 'To effect this elaborate deception, a fake virtual branch ('Bandra branch') and previously closed retail loan accounts were employed, alongside three different accounting software, camouflaging the BBE loans as retail housing loans. In the initial years, well over 30 per cent of all loans of DHFL were to these BBEs," Sebi noted. Despite the BBEs not making interest or principal payments, DHFL booked fictitious interest income, which allowed it to show increasing profits instead of losses between FY 2007-08 and FY 2015-16. These misleading financials misled shareholders and distorted DHFL's share price. According to Sebi, the main orchestrators of the fraudulent scheme were Kapil Wadhawan and his brother Dheeraj Wadhawan. Rakesh and Sarang Wadhawan were also involved through their roles on DHFL's board. The investigation found that loans worth Rs 5,662.44 crore were disbursed to 39 BBEs, of which 40 per cent was subsequently routed to 48 other entities connected to the promoters. PTI SP VN VN view comments First Published: August 13, 2025, 00:30 IST News agency-feeds Sebi bans DHFLs Kapil Wadhawan, Dheeraj Wadhawan, 4 more from securities market Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
The Hindu
13-05-2025
- Business
- The Hindu
Karnataka High Court dismisses plea of PhonePe against making disclosure to police for probe
Observing that 'the duty to protect data must yield, where public interest and criminal investigation intersect,' the High Court of Karnataka has said that digital payment intermediaries such as PhonePe has no complete immunity under the law from disclosing confidential information about transaction details/account credentials of registered users to the police for investigation in a criminal case. 'The protection of consumer privacy cannot eclipse the lawful imperative of investigating officers to secure evidence and take the investigation to its logical conclusion. Confidentiality must coexist with accountability,' the court observed. Justice M. Nagaprasanna made these observations while dismissing a petition filed by PhonePe Pvt. Ltd. Summons questioned The company had questioned the summons issued by CEN police station, Bengaluru Rural district, asking the company to give certain information about transactions on a complaint lodged by a person alleging that he had lost money in 2022 while using several digital payment gateways while transferring various amounts to online cricket betting apps. It was contended by PhonePe that digital payment intermediaries had immunity from disclosing information to anyone, including the police, except the courts, under the provisions of the Payment and Settlement Systems (PSS) Act, 2007 and the Bankers Books Evidence (BBE) Act, 1891 which is made applicable to the Payment and Settlement Systems Act, 2007. Statutory authority 'Section 22 of the PSS 2007 Act, no doubt, permits a payment gateway to keep the documents involved in payment system confidential. Exceptions are carved out in the statute itself. The provision itself carves out that except where such disclosure would be required in obedience to the orders passed by the court of competent jurisdiction or a statutory authority in exercise of power conferred under the statute,' the court noted. Hence, the court said that the investigating officer was a statutory authority, who was acting in terms of the powers conferred under the Code of Criminal Procedure while conducting investigation, and therefore the contention that details could not be divulged could not be accepted. Even the provisions of the BBE Act, 1891 itself made provision for disclosure of information, the court pointed out.
