Tag: DHFL

ED provisionally attaches assets worth ₹578 crore in UPPCL-DHFL case

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The Enforcement Directorate has provisionally attached assets worth ₹578 crore of Wadhawan Global Capital (UK) in connection with the fraud at Uttar Pradesh Power Corporation Limited’s (UPPCL) provident fund which involves Dewan Housing Finance Corporation Ltd (DHFL).

WGC-UK is owned by Kapil Wadhawan and Dheeraj Wadhawan. “The attached assets are in the form of investment made by Wadhawans through WGC-UK in UK based companies,” the ED said in a statement on Tuesday.

The agency had initiated money laundering investigation on the basis of an FIR registered by Lucknow police against some officials of UPPCL for illegal investment of GPF and CPF funds of the employees in DHFL. This was in violation of the government’s notification and directives.

The investigation revealed that DHFL in connivance with UPPCL officials had illegally received ₹4,122.70 crore of GPF and CPF funds of UPPCL’s employees in fixed deposit in DHFL. Out of this, ₹2,267.90 crore of principal amounts is still outstanding to be paid by DHFL.

At this time, DHFL was also engaged in disbursing high value loans to its promoter related firms. All such unsecured loans had been sanctioned under directions of Kapil Wadhawan, who was then Chairman of DHFL and many such loans have turned non performing.

The investigation revealed that many of these loans had been siphoned off without being used for the purpose that they were sanctioned for.

Over ₹1,000 crore generated in this case has been siphoned off to UK by the Wadhawans through seven levels of layering and laundering through more than 30 beneficially owned and controlled Indian firms of Wadhawans.

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Rana Kapoor’s daughter seeks exemption from personal appearance before the trial court, BFSI News, ET BFSI

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Rakhee Kapoor-Tandon, the daughter of jailed banker Rana Kapoor has filed a petition before the Bombay High Court (HC) seeking exemption from in-person appearance before the trial court.

Kapoor-Tandon who is a non-resident Indian (NRI) and a resident of the United Kingdom has expressed her inability to travel to India owing to restrictions imposed due of Covid-19 pandemic, the plea stated.

On September 2, a special Prevention of Money Laundering Act (PMLA) court rejected Kapoor-Tandon’s plea seeking exemption from personal appearance.

“… the petitioner is a NRI, residing permanently outside India since 2016. At present, she is a resident of London, residing with her two minor children. The petitioner is unable to travel in view of various travel restrictions imposed by Govt. of UK, Govt. of India, civil aviation department and other agencies in the prevailing Covid-19 factors,”

The petitioner through the plea filed by her counsel Vijay Aggarwal has also appealed that her application be considered as she hasn’t been chargesheeted by the Central Bureau of Investigation (CBI) in its recently filed supplementary chargesheet in the Yes Bank scam. “…no specific allegations regarding laundering against the petitioner in ED complaints,”it adds.

Last week, a special CBI court here observing that Kapoor’s family members including his wife and two daughters are ‘beneficiary’ of the fraud caused to Yes Bank Ltd (YBL) and have caused a wrongful loss of Rs 4,000 crore of public money, remanded them to judicial custody.

The The court had also observed that the accused showed ‘complicity’ with co-accused Rana Kapoor and are the ‘beneficiary of the amount fraudulently and dishonestly obtained by Kapoor’. “… they have received fraudulently and dishonestly the illegal amount pending to be a corporate loan of Rs 300 crore, Rs 300 crores and Rs 600 crores, so actual beneficiary of the said amount,” the order accessed by ET states.

Meanwhile, in a separate plea, Rana Kapoor has contested his police custody granted by the lower court. The HC in its earlier order had rejected the production application sought by CBI.

“…The special judge vide the impugned order dated August 14, passed on the remand application filed by the CBI… Seeking to declare the CBI remand and custody and all subsequent proceedings including the further custody of the petitioner as illegal and void ab-initio,” the plea seen by ET reads.

Last month, the CBI had filed a supplementary chargesheet against Kapoor, his family members and four former junior employees of the bank in connection with the corruption case, which pertains to the loans given to the now bankrupt financial firm DHFL. The accused were summoned and the hearing in the matter was scheduled for Saturday.

According to the CBI’s first chargesheet filed last year, in June 2018, Kapoor, then the head of Yes Bank’s management credit committee, sanctioned a loan of Rs 750 crore on an application by DHFL promoters, Dheeraj Wadhawan and his brother Kapil Wadhawan, in the name of Belief Realtors Pvt Ltd for development of a Bandra Reclamation Project. This amount was advanced to RKW Developers, a company controlled by Dheeraj Wadhawan although the bank’s risk management team had pointed out multiple and serious issues in the proposal.

The agency’s probe revealed that the loan of Rs 750 crore was not utilised for the stated purpose.

Simultaneously, Kapil Wadhawan is said to have paid a kickback of Rs 600 crore to Kapoor and his family members in the garb of a builder loan from DHFL to DOIT Urban Ventures (India) Private Ltd (DUVPL). Roshini Kapoor, the youngest daughter of Rana Kapoor, is one of the directors of DUVPL.

After deducting a processing fee, an amount of Rs 632 crore was transferred to RKW Developers. This amount was then routed to other entities controlled by the Wadhawans—KYTAAdvisors and RIP Developers—to settle a loan obtained from DHFL for the same Bandra Reclamation Project in November 2015.



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Lenders to DHFL may be paid this week

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Lenders to Dewan Housing Finance Corporation Ltd (DHFL) are likely to get repaid starting this week. According to sources, State Bank of India (SBI) has signed the transaction document on September 20 while other lenders are likely to do so in coming days.

This could also give a boost to second-quarter earnings of the lenders to DHFL, who had written off the loans. The housing finance company has admitted claims of about ₹88,000 crore and banks will have a recovery of about 40 per cent of their loans.

According to the approved resolution plan, Piramal Capital and Housing Finance Ltd will pay ₹37,250 crore for the mortgage financier. Financial creditors are also likely to sign the transaction document and will be repaid soon.

However, fixed deposit holders and others small investors of DHFL are hoping for a favourable verdict from the National Company Appellate Law Tribunal (NCLAT). The NCLAT is scheduled to take up appeals on the NCLT approval to DHFL’s resolution plan on September 29.

“We will wait for the NCLAT to decide on our appeal challenging the NCLT approval. We are prepared to approach the Supreme Court also,” said Vinay Kumar Mittal, a lead petitioner in the court on behalf of FD holders of DHFL.

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Rana Kapoor’s wife, daughters remanded to judicial custody, BFSI News, ET BFSI

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A special CBI court in Mumbai on Saturday denied bail to the wife and two daughters of Yes Bank founder Rana Kapoor in a quid-pro-quo case involving private sector lender DHFL and remanded them to 14-day judicial custody.

Kapoor’s wife Bindu and daughters Radha Khanna and Roshini have been named as accused in charge sheets filed by the probe agency in the case, and the court, after taking cognizance of the charge sheet, had summoned the trio.

The three appeared in court and filed for bail through their legal team comprising Vijay Agarwal and Rahul Agarwal, who argued that the charge sheet was filed without Bindu, Radha and Roshni being arrested, and, therefore, as per a Supreme Court judgement, they deserve to be granted bail.

Vijay Agarwal further argued that the court had already exercised the discretion of issuing summons to his clients, which clearly shows there is no need for their arrests.

However, Special Judge S U Wadgaonkar rejected their bail applications and sent them to judicial custody till September 23.

After the prosecution submitted that the jail superintendent wouldn’t accept the custody of the accused without an RTPCR report, the court allowed the probe agency to keep the three in judicial custody till it was received.

As per the Central Bureau of Investigation, Kapoor, who is in jail in a related case being probed by the Enforcement Directorate, entered into a criminal conspiracy with DHFL’s Kapil Wadhawan.

The CBI has stated that between April and June, 2018, Yes Bank invested Rs 3,700 crore in short-term debentures of Dewan Housing Finance Corporation Ltd (DHFL).

In return, DHFL’s Wadhawan allegedly “paid kickback of Rs 600 crore” to Kapoor in the form of loans to DoIT Urban Ventures, a firm controlled by Kapoor’s wife and daughters.



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Former YES Bank chief ignored warnings of investment decisions from officials, chargesheet reveals, BFSI News, ET BFSI

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Former YES Bank managing director and chief executive officer Rana Kapoor ignored warnings fromt the treasury and risk management teams, which led to huge losses, the latest charge sheet by the Central Bureau of Investigation showed.

The charge sheet was made public last week, and was reviewed by The Hindustan Times. “Investigation revealed that Rana Kapoor had shown undue personal interest in aforesaid investment and took premeditated decision of investment without discussing the matter with concerned officials, who were having adverse view against such investments,” said the supplementary charge sheet filed by CBI on July 13.

The CBI and Enforcement Directorate (ED) are investigating the loans issued by YES Bank when Kapoor was its MD and CEO (till January 2019).

Furthermore, Kapoor had misled the board through a false declaration on May 17, 2018, to enhance the exposure limit of DHFL from Rs 2,100 crore to Rs 4,000 crore, the chargesheet said. As a result, the board approved investment of Rs 2,000 crores and Rs 700 crore in a public issue of non-convertible debentures of DHFL. This was despite the investment team advising against the issue.

According to the CBI, Kapoors were paid huge bribes by Dewan Housing Finance Corp (DHFL) in lieu of favours extended by the bank. It alleged that a total of Rs 600 crore was paid in the form of investment.

The ED has alleged that loans worth around Rs 30,000 crore, when Rana Kapoor headed the bank, have turned into bad loans and Rs 20,000 crore have become non-performing assets.

So far, the ED has attached assets worth Rs 2,400 crore in the case, which include Rs 900 crore from Kapoors and Rs 1,411 crore from DHFL’s Kapil and Dheeraj Wadhawan.



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DHFL: SC asks NCLAT to wrap up 63 Moons’ appeal against Piramal Group in 2 months

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The Supreme Court has directed the National Company Law Appellate Tribunal (NCLAT) to complete the hearing of the appeal filed by 63 Moons Technologies against the Piramal Group’s resolution plan for mortgage financier Dewan Housing Finance Corporation Ltd (DHFL), within two months.

Enabling the implementation of the resolution process of DHFL to continue, the Supreme Court also refused to grant a stay on it.

“63 Moons appeal in NCLAT questioned the legality of Piramal’s Resolution Plan for DHFL, where Piramal may be able to potentially pocket ₹45,000 crore that may be recovered from the Wadhawans and their associates,” 63 Moons said in a statement, adding that the NCLAT, while issuing the notice, did not stay the implementation of the resolution plan.

63 Moons holds non-convertible debentures worth over ₹200 crore issued by DHFL.

It had moved the Supreme Court last month against the NCLAT’s order that refused to stay the resolution plan for DHFL. The next hearing of 63 Moon’s petition in the NCLAT is on September 15.

NCLAT to hear FD holders’ plea in DHFL resolution case on Sept 16

It has issued notices to the Committee of Creditors, the administrator of DHFL and Piramal Capital and Housing Finance Ltd (PCHFL).

The financial services company had approached the NCLAT soon after the NCLT approved (June 7) the Piramal Group’s ₹37,250-crore resolution plan for mortgage financier DHFL, subject to certain conditions.

Steep haircut

The company had termed the resolution plan as disappointing for NCD holders as they have to take a steep haircut.

“The Supreme Court order today is a win-win for both parties. It ensures that the implementation of the resolution plan of DHFL will continue even while the NCLAT will hear the petition of 63 Moons in a time-bound manner and gives clarity to NCD holders,” said an expert.

However, whether 63 Moons will appeal the order of the NCLAT if it is not in its favour remains to be seen.

“The order passed by the Supreme Court has come as a set back to the creditors holding NCDs in DHFL. Though the apex court has directed the NCLAT to expeditiously decide the issue of undue enrichment raised by 63 Moons Technologies Ltd. within two months, the refusal to stay the implementation of the Resolution Plan may cause discontent in the NCD holders, as at present, they stand to bear the maximum loss as opposed to any other creditor of DHFL,” said Ruby Singh Ahuja, Senior Partner, Karanjawala & Co.

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Personal insolvency proceedings start against Venugopal Dhoot; more promoters in line for action, BFSI News, ET BFSI

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Videocon chairman Venugopal Dhoot is already under CBI investigation on charges of causing a wrongful loss to a consortium of Indian PSU banks led by SBI.

After ordering the freezing of assets of Videocon promoter Venugopal Dhoot and other officials, the National Company Law Tribunal (NCLT) has admitted a personal insolvency petition against Dhoot.

Earlier the Ministry of Corporate Affairs (MCA) received permission to freeze Dhoot’s assets.

Asish Narayan has been appointed as the resolution professional (RP) in the case by a division bench led by judicial member Suchitra Kanuparthi and a technical member Chandra Bhan Singh. The next date of hearing is 20 September.

Lenders to Videocon had filed the personal insolvency petition to attach Dhoot’s assets a year ago and its admission now means the recovery process will go on full steam. But it is unclear how the admission of personal insolvency proceedings will impact the NCLT’s order freezing Dhoot’s assets on the MCA plea.

State Bank of India (SBI) the lead lender in the consortium of bank creditors to has also taken Venugopal’s brothers and Videocon co-promoters Rajkumar Dhoot and Pradipkumar Dhoot under the personal bankruptcy law.

Rs 18,000 crore debt

Banks led by SBI are seeking to recover close to Rs 18,000 crore by initiating guarantees given by the Dhoot brothers at different points in time to access loans from banks. Claims from Venugopal Dhoot come to about Rs 6100 crore while two separate petitions have also been filed by SBI has to invoke Rs 6,158 crore of personal guarantee given by Pradipkumar Dhoot and Rs 5353 crore to be recovered from Rajkumar Dhoot which are yet to receive the NCLT go ahead.

These guarantees were given by them for a mix of term and working capital loans granted to the company over the years.

Cyril Amarchand Mangaldas is representing SBI in the case.

The way ahead

Now that NCLT has okayed the recovery process the RP will examine the application and submit his report stating the reasons for approval or rejection of the application within 10 days.

This process is different from the corporate insolvency process and the NCLT will determine going ahead with the personal insolvency based on the report of the RP.

In December over 94% of the creditors by value voted for Vendanta arm Twin Star Technologies as the preferred bidder to take over Videocon. Vedanta’s offer of a little over Rs 3,000 crore was a haircut of more than 95% on admitted claims of Rs 61,770 crore.

Other defaulting promoters

Banks have approached the National Company Law Tribunal for invoking personal guarantees of promoters of 17 defaulting companies.

The defaulting promoters include those of Punj Lloyd, Amtek Auto, ABG Shipyard, Videocon, Varun Shipping, and Lanco, according to reports.

Armed with a Supreme Court order, banks are looking to invoke personal guarantees of tycoons from Venugopal Dhoot to Kapil Wadhawan to recover unpaid loans from their delinquent firms

The guaranteed debt

According to an estimate, the top 10 personal guarantors have guaranteed debt of over Rs 1.6 lakh crore. Among the big names, former promoters of Bhushan Steel and Power Sanjay Singhal and his wife Aarti Singhal had furnished personal guarantees worth up to Rs 24,550 crore to take loans from a consortium of banks led by SBI.

The former promoter of Reliance Communications, Anil Ambani, has also given a personal guarantee against the loan taken. Erstwhile promoter Wadhawan stands guarantee to loans taken by DHFL, which is sitting on debt of about Rs 90,000 crore, while Dhoot has also given a personal guarantee to a portion of Rs 22,000 crore loan to Videocon.



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DHFL Q1 net profit surges to ₹314.43 crore

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Dewan Housing Finance Corporation Ltd (DHFL) reported a consolidated net profit of ₹314.43 crore for the quarter ended June 30, 2021, a jump of 348.5 per cent from ₹70.1 crore a year ago.

“The company has not made any provision for interest on borrowings amounting to ₹1,88,689 lakh for the quarter ended June 30, 2021 in view of the company’s CIR process,” it said in the stock exchange filing, adding that under the Insolvency and Bankruptcy Code, the treatment of creditors under the resolution plan is as per debts due as on the insolvency commencement date and therefore, no interest is accrued and payable after this date.

“Had the interest was accrued on borrowings and provided for, the profit for the quarter ended June 30, 2021 would have been lower by ₹l,40,328 lakh (net of taxes),” it further said.

DHFL’s total revenue from operations fell 13.9 per cent to ₹2,000.69 crore in the first quarter this fiscal from ₹2,324.73 crore in the corresponding period last fiscal.

Its total income also fell by 14.1 per cent on year on year basis to ₹2,001.36 crore.

In June this year, the National Company Law Tribunal had approved the resolution plan of Piramal Capital and Housing Finance for DHFL.

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Invest in Piramal Capital NCDs only if you can take some risk

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Piramal Capital & Housing Finance (PCHFL), a non-deposit taking housing finance company from the Piramal Group, is coming out with a secured NCD (non-convertible debentures) issue of ₹200 crore with an option to retain oversubscription of up to ₹800 crore. The offer is open during July 12-23, 2021. This is the first tranche of the ₹2,000 crore proposed to be raised by the home financier.

What’s on offer

There are five series, I to V, with tenures of 26, 36, 60 and 120 months offering a fixed rate of interest. Except for series II, which is a cumulative option, all other series come with an annual interest (coupon) pay-out option. Series II offers a yield of 8.35 per cent for a 26-month NCD. The other four non-cumulative series offer 8.35 per cent to 9.00 per cent per annum coupon pay-out for 26 to 120-month tenure NCDs.

While the coupons offered are attractive, especially given the current low interest rates, they likely reflect the higher risk. PCHFL is taking over the stressed mortgage lender, Dewan Housing Finance Corporation (DHFL) with the risk of this impacting the loan book quality and capital adequacy of the combined entity.

The NCDs have been rated CARE AA (CWD) that is, under credit watch with developing implications by CARE Ratings and [ICRA] AA (Outlook: Negative) by ICRA. This is lower than the AAA rating assigned to debt papers with the highest degree of safety. A negative outlook indicates the possibility of a ratings downgrade. Investors who care most for capital safety are better off investing a portion of their debt allocation in AAA-rated secured NCDs.

Up to 40 per cent of the tranche I issue has been reserved for retail investors to be allotted on ‘first come, first served’ basis. Investors must apply for a minimum of 10 NCDs (₹10,000) that can be split across the five series and in multiples of 1 NCD (₹1,000).

About issuer

PCHFL is a 100 per cent subsidiary of Piramal Enterprises. It provides wholesale funding (bulk of the loan book) to real estate developers, corporates and SMEs across sectors and retail funding, including housing finance to individuals. PCHFL had a loan book of ₹32,354 crore and net NPAs (non-performing assets) of 1.90 per cent as of March 31, 2021. Real estate lending contributed over three-fourths of the housing finance company’s loan book.

Non-real estate corporate finance accounted for 7.1 per cent and retail lending 13.7 per cent.

Between FY19 and FY21, PCHFL reported a 4 per cent fall in operational income to ₹5,082 crore and 15.3 per cent decline in net profit to ₹1,034 crore. PCHFL is, however, well-capitalised with a capital to risk weighted assets ratio (CRAR) of 32.30 per cent as on March 31, 2021, well above the mandated 15 per cent limit.

Last month, the National Company Law Tribunal approved the takeover of (DHFL) by PCHFL for a consideration of ₹34,250 crore. The merger of PCHFL with DHFL, once completed, will help the former expand its retail loan portfolio and improve its wholesale-retail loan mix. It will also benefit from DHFL’s existing branch network. However, investors need to watch out for the risk of DHFL’s loan book lowering the asset quality of the merged entity as also impinging on the currently high capital adequacy ratio. As of March 31, 2020, DHFL had a loan book of ₹66,203 crore and negative net-worth of ₹5,538 crore.

Interest received on the NCDs will be taxed at your income tax slab rate. NCDs bought in the issue and held till maturity (both at face value) will result in no capital gains and so no tax. In all other cases, any capital gains will be taxed. According to Archit Gupta, Founder and CEO, ClearTax, if the NCDs are sold after being held for up to 12 months, short-term capital gains, if any, will be taxed at your slab rate. If the NCDs are sold beyond that, long-term capital gains tax at 10 per cent without indexation plus education and higher education cess of 4 per cent will apply.

Other options

Those wary of taking on too much risk can choose from the relatively safer AAA-rated bonds. For instance, as per HDFC Securities data, Tata Capital Financial Services bonds (series – 845TCFS22 Individual) with a residual maturity of 1.15 years are available on the secondary market at a yield-to-maturity (YTM) of 7.10 per cent. The YTM indicates your overall return (CAGR) assuming you buy the bonds today and hold them until maturity. A notch lower, the AA+ Shriram Transport Finance Company bonds (series – STFC YK Individual) with a residual maturity of 2.03 years are available at a YTM of 7.77 per cent.

(This is a free article from the BusinessLine premium Portfolio segment. For more such content, please subscribe to The Hindu BusinessLine online.)

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LIC puts 15 bad loan accounts including DHFL, RCom on block ahead of IPO, BFSI News, ET BFSI

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LIC has put on block its fully provided 15 bad loan accounts, including DHFL, RCom and IL&FS, on sale as it cleans up books ahead of its initial public offering.

The accounts that are put on sale include DHFL (Rs 2,610 crore), RCom (Rs 2,200 crore), Reliance Capital (Rs 775 crore), Amtek Auto (Rs 380 crore) and Jaiprakash Associates (Rs 313 crore) and IL&FS (Rs 300 crore).

The corporation has brought down its net non-performing assets to 0.05% as of March 2021 from 0.79% as of March 2020 and is selling its fully provided NPAs.

The corporation has fully provided for these loans and the sale would improve the quality of its portfolio. The corporation is selling its default debt in a phased manner.

IDBI Capital Markets is offering LIC’s loans to asset reconstruction companies, banks, NBFCs, and alternate

investment funds. The potential buyers must sign a non-disclosure agreement. The investment bank may resort to the Swiss challenge method of selling where the rivals will be given an option to improve on the best bid. Some of the loans were being sold because of a regulatory requirement.

Gearing up for IPO

As part of its IPO plans, the corporation plans to audit its half-yearly accounts for the period ended September 2021.

Traditionally, the corporation has been publishing only full-year accounts. The half-yearly accounts are likely to include the embedded value — a valuation method unique to insurance companies that includes the net present value of future earnings from policies. LIC has appointed Milliman as the actuary for the process and EY as the advisers.

The corporation is simultaneously engaged in the recast of its capital base that will enable the distribution of shareholding over a much wider base.

No Chairman post

LIC will now have the post of Chief Executive Officer and Managing Director instead of the Chairman position, with the government making changes to relevant rules ahead of the IPO.

The changes have been made by the Department of Financial Services under the finance ministry by amending Life Insurance Corporation of India (Employees) Pension (Amendment) Rules. Besides, some other rules under LIC Act, 1956, have been amended.

“Chief Executive and Managing Director means the Chief Executive Officer and Managing Director appointed by the Central Government under section 4 of the Act (LIC Act 1956),” according to a gazette notification issued on July 7.

To facilitate the listing of the insurance behemoth, the government has already approved raising its authorised share capital to Rs 25,000 crore.

Besides, the Department of Economic Affairs under the finance ministry recently amended the Securities Contracts (Regulation) Rules.

Companies that have a market capitalisation of more than Rs 1 lakh crore at the time of listing can now sell just five per cent of their shares, with the latest amendment in rules, a move that will be beneficial for the government during the LIC initial public offer.

Such entities will be required to increase its public shareholding to 10 per cent in two years and raise the same to at least 25 per cent within five years.



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