ED attaches assets worth 40.40 crore rupees in DHFL bank fraud case

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ED attaches DHFL property

Highlights

The ED attached assets worth 40.40 crore rupees in the DHFL bank fraud case under the Prevention of Money Laundering Act, 2002.
A forensic audit found that loans and advances of more than 29,100 crore rupees were disbursed to 66 promoter-linked entities.
In 2018-19, DHFL routed proceeds of crime worth 40.40 crore rupees to two Mumbai firms, with payments allegedly made for services.

This article was translated from the original. Read the original version by our correspondent here.

Investigation launched from CBI FIR; scope of attachment

According to the Enforcement Directorate, the action was taken as part of an ongoing investigation under the Prevention of Money Laundering Act, 2002, arising from an alleged bank loan fraud case involving M/s Dewan Housing Finance Corporation Ltd and its promoters, Kapil Wadhawan and Dheeraj Wadhawan.

The investigation began on the basis of an FIR registered by the CBI, AC-6, New Delhi. The FIR was registered on a complaint by Union Bank of India on behalf of a consortium of 17 banks. Kapil Wadhawan, Dheeraj Wadhawan and others are alleged to have conspired to defraud banks in connection with credit facilities of 42,871 crore rupees extended to DHFL. According to the FIR, the loan funds were allegedly misappropriated and misused through manipulation of the company's books of account, causing the consortium of lenders a loss of approximately 34,615 crore rupees.

Fund flows to promoter-controlled entities and impact on the banking sector

The ED's investigation has found that the Wadhawan family allegedly controlled around 225 companies, directly or indirectly, through family members, associates and employees. DHFL's forensic audit identified 66 such entities linked to the promoters, which received loans and advances of more than 29,100 crore rupees. The investigating agency says that approximately 11,549 crore rupees was routed to 87 promoter-controlled entities through an allegedly fictitious “Bandra branch,” where large disbursements were shown as home loans in the names of around 2.60 lakh fake retail borrowers.

According to the agency, this allegedly inflated retail loan book helped DHFL raise further borrowings from banks, evade regulatory scrutiny and conceal related-party transactions. The ED has already filed a prosecution complaint against 17 accused before the Special Court, PMLA, Mumbai, followed by a supplementary complaint against 5 more accused. During search operations conducted on 19.08.2026, the agency also froze approximately U.S. $5.41 million, or around 51.75 crore rupees, linked to the disposal of foreign assets belonging to the Wadhawan family.

The investigation has also found that during the 2018-19 financial year, DHFL diverted alleged proceeds of crime worth 40.40 crore rupees to two Mumbai-based proprietorship firms, M/s Reliable Services and M/s Millennium Services. These firms are said to be linked to Harish Dedhiya and his wife, Dhara Dedhiya, and according to the agency, the payments were made for alleged services that were never provided. The case continues to raise serious questions about corporate governance, related-party transactions and loan monitoring systems in the Indian banking sector, while the ED says it is continuing action to return the proceeds of crime to the consortium banks.

Our previous report discussed patterns of “indirect evergreening” at Indian banks, where some banks channel funds through related parties to delay the recognition of bad loans and create the appearance of recovery. The article noted that such loans may be reported at lower interest rates despite being more prone to default, and that this trend increases risks to bank stocks and financial stability.

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