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Piramal Capital and Housing Finance Limited

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Piramal Capital and Housing Finance Limited
Company typePublic
BSE: 511072
NSE: DHFL
ISININE202B01012
IndustryFinancial services
Founded11 April 1984; 40 years ago (1984-04-11)
FounderRajesh Wadhawan
HeadquartersMumbai,
India
Key people
  • Jairam Sridharan
    (Managing director)
Products
ServicesFinancial Services
Increase ₹10,44.5 crore (2017-18)[1]
Increase ₹1,171 crore (2017-18)[1]
AUMIncrease ₹1,11,086 crore [1]
Number of employees
9,500+ (2018)[1]
ParentPiramal Group
Websitewww.piramalfinance.com

Piramal Capital and Housing Finance Limited (earlier Dewan Housing Finance Corporation Ltd. (DHFL)) is a non-deposit taking housing finance company, headquartered in Mumbai with branches in major cities across India.[2][3] DHFL was established to enable access to economical housing finance to the lower and middle income groups in semi-urban and rural parts of India. DHFL is the second housing finance company to be established in the country.[4] The company also leases commercial and residential premises. DHFL is among the 50 biggest financial companies in India.[5]

DHFL is rated ICRA D by ICRA Limited.[6]

History

[edit]

DHFL was established and incorporated by Rajesh Kumar Wadhawan on 11 April 1984. The name of the company was changed to Dewan Housing Development Finance Ltd. and later to Dewan Housing Finance Corporation.[7]

In 2010, DHFL acquired Deutsche Postbank Home Finance unit for ₹1079 crores.[8] On 18 December 2013, DHFL acquired 74% stake DHFL Pramerica Life Insurance Company Ltd.[9]

On 29 January 2019, Cobrapost, an Indian investigative journalist group, published an exposé of DHFL for using various shell corporations to siphon more than ₹ 31,000 crores of public money for the personal gains of the DHFL's primary stakeholders: Kapil Wadhawan, Aruna Wadhawan and Dheeraj Wadhawan.[10] In the same article, Cobrapost also raised allegations of political donations worth crores of rupees, in violation of Section 182 of Companies Act, 2013 for political donations.[10] DHFL filed a response with the Bombay Stock Exchange saying the allegations raised by Cobrapost were untrue. DHFL, also rebutted these allegations in a hosted investors / analysts conference and clarified that the ₹ 31,000 crore loans mentioned in the allegation consist of its project loan portfolio. Also the company tried to clarify that the advances commented by Cobrapost should be ₹ 21,000 Crores and not ₹ 31,000 crores. Following the Cobrapost allegations, Indian credit rating agencies reaffirmed their high safety rating for the financial instruments issued by DHFL.[11]

Even after the emergence of serious allegations of misconduct against its business, the Indian credit rating agencies continued to issue high safety ratings for the DHFL financial products, but, on 6 June 2019, DHFL defaulted on its debt repayment, resulting in a debt rating downgrade, immediately wiping out 16% of the value from its stock price. At the time, the fall in DHFL stock price was an all year low. This rapid decline in stock price resulted in a loss of investor confidence.[12][13]

On 20 November 2019, the Reserve Bank of India removed the board of directors of the company citing corporate governance failure and the company's defaulted payment obligations.[14]

Financial irregularities and probes against DHFL

[edit]

In 2019, DHFL stopped payment of bonds and defaulted on its loan obligations. This caused its stock to fall over 97% and a government intervention in the company.[15][16][17][18][19]

In August 2019, as efforts to draft a resolution plan by restructuring DHFL debt into equity, a few of the DHFL bond holders moved to the debt recovery tribunal, which could impact the resolution process.[20] The company meanwhile offered to repay all investors in full with due process of inter-creditor-agreement.[21]

In October 2019, the Enforcement Directorate conducted raids at several places of DHFL offices and promoter residences and found links of money laundering activity in loans given to firms closely linked to the promoters of the company.[22] Additionally the trail of the loan given by DHFL to Sunblink real estate in 2010 lead to gangster Iqbal Mirchi, an accomplice of the organized crime mastermind Dawood Ibrahim.[23]

On 20 November 2019, under Section 45-IE (I) of the Reserve Bank of India Act, 1934, the Indian central bank removed the board of directors of Dewan Housing Finance Corporation Limited (DHFL). The reasons cited by the banking regulator for the dismissal of the DHFL board of directors were: inadequate governance and the various defaults on its payment obligations.[24]

On 27 January 2020, the promoter of DHFL, Kapil Wadhawan was arrested under the Prevention of Money Laundering Act (PMLA). The arrest was connected to his firm's alleged involvement in providing loans to the organized criminal enterprise of Dawood Ibrahim.[25] On 22 February 2020, the PMLA court granted bail to Kapil Wadhwan. The Bombay high court upheld the bail decision by PMLA court, rejecting Indian Enforcement Directorate requests to stay the bail application.[26]

The ED has linked Yes Bank for various fraud and transactions amounting to 3700 crores as debentures in DHFL. The central bank appointed administrator at Dewan Housing Finance (DHFL) has ordered a transaction audit at the non-bank lender after allegations of money laundering surfaced in the aftermath of the regulatory action on Yes Bank.[27]

On 24 March 2021, CBI filed a new suit against DHFL and its promoters Kapil Wadhawan and Dheeraj Wadhawan, wherein the later were accused of syphoning off the welfare subsidy fund of Pradhan Mantri Awas Yojana by creating 260,000 fake home loan accounts under the same scheme under the guise of a non-existent branch.[28][29] The suit says, fake loans were granted worth ₹14,046 crore of which ₹11,755.79 crore were routed to shell corporations and citing these loans, subsidy amounts were claimed under Pradhan Mantri Awas Yojana.[30][31]

Operations

[edit]

As of June 2018, DHFL has 209 branches and 113 service centres.[32] It also has a representative office in London.

References

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  1. ^ a b c d "DHFL Financial Report FY 2017-18" (PDF). {{cite journal}}: Cite journal requires |journal= (help)
  2. ^ "NSE - National Stock Exchange of India Ltd". nse-India.com. Retrieved 1 February 2018.
  3. ^ "Stock Share Price dewan housing finance corporation ltd | Get Quote dhfl". bseindia.com. BSE. Retrieved 1 February 2018.
  4. ^ "About us - DHFL". dhfl.com. Retrieved 1 February 2018.
  5. ^ "Dewan Housing Finance Corporation History | Dewan Housing Finance Corporation Information - The Economic Times". economictimes.indiatimes.com. Retrieved 1 February 2018.
  6. ^ "DHFL ratings" (PDF). BSE India.
  7. ^ "Dewan Housing Finance Corporation > Company History > Finance - Housing > Company History of Dewan Housing Finance Corporation - BSE: 511072, NSE: DHFL". moneycontrol.com. Retrieved 1 February 2018.
  8. ^ "DHFL buys Deutsche Postbank's unit for Rs 1,079 crore". Business Standard India. Press Trust of India. 2 December 2010. Retrieved 1 February 2018.
  9. ^ "DHFL and Prudential Financial, Inc. complete ownership transfer of life insurance joint venture in India" (PDF).
  10. ^ a b ":: Cobrapost ::". cobrapost.com. Archived from the original on 29 January 2019. Retrieved 15 January 2022.
  11. ^ "News portal alleges Rs 31,000 crore fraud by home finance company DHFL - Times of India ►". The Times of India. 30 January 2019. Retrieved 5 February 2019.
  12. ^ "DHFL tanks 16% after rating downgrade; what should investors do?". Moneycontrol. 6 June 2019. Retrieved 7 June 2019.
  13. ^ Mahesh, Prashant (7 June 2019). "Debt mutual funds take a tumble as DHFL slips on payment". The Economic Times. Retrieved 7 June 2019.
  14. ^ "Reserve bank of India - Press Release".
  15. ^ "Why Dewan Housing Finance share price fell up to 15% in early trade today". businesstoday.in. 6 June 2019. Retrieved 25 July 2019.
  16. ^ Borate, Neil (21 May 2019). "DHFL puts fresh deposits and renewals on hold, halts pre-mature withdrawals". Mint. Retrieved 25 July 2019.
  17. ^ Borate, Ravindra N. Sonavane, Neil (22 May 2019). "DHFL falls nearly 10% as company stops accepting fresh deposits, halts renewals". Mint. Retrieved 25 July 2019.{{cite web}}: CS1 maint: multiple names: authors list (link)
  18. ^ Roy, Anup (31 January 2019). "Govt launches probe against DHFL, issue may hit sector investment". Business Standard India. Retrieved 25 July 2019.
  19. ^ "YES Bank share price loses 30% on surprise Rs 1,506-crore net loss in Q4". businesstoday.in. 30 April 2019. Retrieved 25 July 2019.
  20. ^ Ghosh, Shayan (23 September 2019). "Use of insolvency code in Dewan Housing will expedite resolution process". Mint. Retrieved 23 September 2019.
  21. ^ Das, Saikat; Rebello, Joel (28 September 2019). "DHFL offers to repay investors in full, but seeks nod for ICA". The Economic Times. Retrieved 28 September 2019.
  22. ^ "Debt-laden DHFL loaned to firms tied to its promoters: ED probe". The Indian Express. 21 October 2019. Retrieved 21 October 2019.
  23. ^ "DHFL News: DHFL lent Rs 2,186 crore to company under lens for Mirchi links, ED investigations reveal". The Economic Times.
  24. ^ "Reserve Bank of India - Press Releases". Archived from the original on 13 February 2020.
  25. ^ "DHFL promoter Kapil Wadhawan arrested in Iqbal Mirchi money laundering case". 27 January 2020. Archived from the original on 14 February 2020.
  26. ^ "Cricket matches in Wankhede to disrupt normal traffic in South Mumbai". 8 March 2020.
  27. ^ "Crisis-Hit Yes Bank Founder Rana Kapoor's Wife, Daughters Charged By CBI". NDTV.com. Retrieved 13 March 2020.
  28. ^ Correspondent, H. T. (24 March 2021). "CBI books DHFL over fake accounts created in PMAY". mint. Retrieved 25 March 2021. {{cite web}}: |last= has generic name (help)
  29. ^ "DHFL Share Price Hits Lower Circuit After CBI Books Promoters For Creating Fake Accounts". Moneycontrol. 25 March 2021. Retrieved 25 March 2021.
  30. ^ "CBI books DHFL for creating over 2 lakh fake home loan accounts under PMAY". Hindustan Times. 24 March 2021. Retrieved 25 March 2021.
  31. ^ "DHFL directors availed thousands of crores through fake loan accounts under PMAY: CBI". www.businesstoday.in. 24 March 2021. Retrieved 25 March 2021.
  32. ^ "Dewan Housing Finance Corporation Share Price Live, Dewan Housing Finance Corporation Stock Price Today". The Economic Times. Retrieved 1 February 2018.
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