What You Need To Know About DHFL Scam Accused Wadhawans

At the center of the PMC and Yes Bank scams are the Wadhwan family who has once again become embroiled in trouble after 23 members of the family violated the lockdown guideline and went on a holiday to Mahabaleshwar.

The Wadhawan family along with others travelled from Khandala to Mahabaleshwar on Wednesday evening in their cars.

New Delihi: In 2019, customers of Yes Bank had a rude awakening when it was announced that the bank had collapsed. One of the reasons for this was found to be the bank lending to corporate entities that did not pay loans back. Out of the number of firms that defaulted one of them was Dewan Housing Finance Ltd. The case was eerily like what happened with the customers of a multi-state co-operative bank, Punjab and Maharashtra Co-operative Bank (PMC) when its assets were frozen by the Reserve Bank of India (RBI). At the center of these scams is the Wadhwan family who has once again become embroiled in trouble after 23 members of the family violated the Lockdown guideline and went on a holiday to Mahabaleshwar. Scams and Wadhawan Family Dewan Kuldip Singh Wadhawan was a Punjabi refugee who settled in Mumbai from Lahore after the Partition. He started a housing finance and realty development business which was later overtaken by his sons, Late Rajesh Wadhawan and younger brother Rakesh Wadhawan. Later the family split and while the former branch of the family took control of Dewan Housing Finance Ltd (DHFL) the latter owned Housing Development and Infrastructure Ltd (HDIL). The Mumbai based DHFL is a non-banking entity or a shadow bank and the company provides housing finance and home loans linked to insurance plans. The company has branches across the country and was amongst fifty big financial companies in India. It concentrated on customers from low to middle-income households. Kapil and Dheeraj Wadhawan sons of Late Rajesh Wadhawan are chairman and director of the company respectively. In January 2019, an investigative journalism portal published an expose that alleged that the company was using shell companies to buy assets abroad. According to the news piece, DHFL promoters had lent money to ‘shell companies’ which were linked to the promoters and they used the money to buy assets abroad. After the story came out share prices of the company started falling. This happened shortly after other major companies went bust such as NBFC, IL&FS which also impacted the financial health of DHFL causing the firm to default on its interest payment by June 2019. Later in 2019, the Enforcement Directorate (ED) raided DHFL offices and promoters’ residences and discovered evidence of money laundering and connection to the underworld. In fact, Dheeraj Wadhwan had a direct link to a case of alleged terror financing against late gangster Iqbal Memon, alias Iqbal Mirchi. HDIL, on the other hand, caused the collapse of PMC bank. The bank was used by Rakesh and son Sarang Wadhawan to hide their debts and for unrecorded loans. In January this year, Kapil Wadhwan was arrested under the Prevention of Money Laundering Act (PMLA). But in February the court granted bail despite protests by the ED. Along with the Wadhawans, Rana Kapoor from Yes Bank was also arrested for charges of money laundering as during his tenure he had sanctioned loans worth Rs 202 Crore to DHFL and HDIL (which has also declared bankruptcy). Similarly, father and son duo Rakesh and son Sarang Wadhawan were also taken under judicial custody for the HDIL and PMC scam but were released after three months and put under house arrest. DHFL and HDIL fallout is a corporate fraud and it has links with the problems with NBFC and even IDBI. Mahabaleshwar Picnic According to local police officials, the Wadhawan family along with others travelled from Khandala to Mahabaleshwar on Wednesday evening in their cars, even when both Pune and Satara districts are sealed amid the ongoing lockdown for containing coronavirus. Several BJP leaders have taken to social media criticising the Maharashtra government for facilitating the travel of the Wadhawan family.