THE MONEY LAUNDERING SCAM INITIATED BY DEWAN HOUSING FINANCE CORPORATION LIMITED (DHFL) AND YES BANK: AN EXPLORATORY ANALYSIS OF OVER-LEVERAGED BORROWINGS

Abstract

Dewan Housing Finance Corporation Ltd. (DHFL) was founded in 1984 in the state of Maharashtra, India by the Wadhawan family to facilitate access to cost-effective housing finance opportunities for the lower and middle-income strata residing in semi-urban and rural India. Till 2018, the firm was ranked amongst the distinguished performers in the housing finance industry in the nation. Yes Bank was founded in India in 2004 by Rana Kapoor and Ashok Kapur. In its initial years of expansion, Yes Bank experienced immense development. However, the bold and aggressive lending practices by the bank involved high risks and the bank’s loan book included diverse defaults including DHFL. This impetuous lending ultimately led to the Non-Performing Assets (NPA) tragedy and the RBI’s authorized moratorium for Yes Bank. This research paper provides a detailed analysis of an Indian investigative journalist company named Cobrapost which published an exposé in January 2019 indicting DHFL of exploiting more than INR 31,000 crore of public finances through diverse shell firms and siphoning private benefits primarily for the firm’s immediate stakeholders. The study further underscores the details of the famous fraudulent case between Yes Bank and DHFL, the Central Bureau of Investigation booking Rana Kapoor and the Wadhawan brothers on accusations of criminal conspiracy and defrauding under the Prevention of Money Laundering Act, 2002 and the associated negative consequences for the two business organizations. This banking forgery has been labeled as one of the biggest scams in the banking industry in the nation. So let's hop on to read the detailed case analysis