DHFL’s Bandra Book Scam: SEBI Slaps Rs120 Crore Fine, Bans 4 Wadhawans, 2 Others for Diverting Rs14,000 Crore Loan

Moneylife Digital Team 13 August 2025

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has slapped Rs120 crore penalty and barred from markets for up to five years six former top executives, including four members of the Wadhawan family of Dewan Housing Finance Corporation Ltd (DHFL). The action follows a detailed probe that uncovered large-scale fund diversion, falsification of accounts and deliberate misrepresentation of the company’s financial position.

The order, issued by SEBI’s whole-time member (WTM) Ananth Narayan G, names Kapil Wadhawan, DHFL’s former chairman and managing director (CMD) and Dheeraj Wadhawan, the company’s former director, as the key architects of the scheme. Both face five-year market bans and fines of Rs27 crore each. Rakesh Wadhawan, former non-executive chairman and Sarang Wadhawan, former non-executive director, have been banned for four years and fined Rs20.75 crore each.

Harshil Mehta, ex-joint managing director and chief executive officer (CEO), has been fined Rs11.75 crore, while former chief financial officer (CFO) Santosh Sharma faces a Rs12.75 crore penalty. Both are barred for three years. During their bans, none of them can trade in securities, access the market, or hold directorships or key managerial roles in listed or fund-raising public companies.

SEBI’s investigation found that between 2006 and 2019, DHFL management channelled thousands of crores to “Bandra Book Entities” (BBEs) — shell firms linked to the promoters — while recording them as retail housing loans. By March 2019, DHFL’s exposure to these BBEs had swelled to Rs14,040.50 crore, despite many having no assets, business, or repayment capacity.

The scheme involved a fictitious ‘Bandra branch’ and multiple accounting systems to mask loans to BBEs. In some years, over 30% of DHFL’s total loan portfolio consisted of such fraudulent entries. Even as BBEs defaulted, DHFL booked fake interest income to present inflated profits, misleading shareholders, lenders, auditors, and the market.

SEBI found that Rs5,662.44 crore was advanced to 39 BBEs, with 40% subsequently routed to 48 other promoter-linked entities. The regulator held that this misrepresentation not only hid the true extent of DHFL’s financial distress but also facilitated the siphoning of public funds to related parties.

The Wadhawan family members were found to have designed and authorised the fraud, while Mr Mehta and Mr Sharma played critical roles in executing and concealing the transactions. SEBI termed it an ‘egregiously fraudulent scheme’ that severely harmed investor interests and compromised market integrity.

Once a major player in housing finance, DHFL collapsed under the weight of governance failures and systemic lapses, marking one of the largest corporate frauds in India’s non-banking finance company ( NBFC) sector.

You may want to read our coverage of the DHFL issue here...

Comments

User

ahkumaresh

6 months ago

I lost a heavy amount in DHFL Fixed. Deposits going by the AAA rating given by the Agencies to its Fixed Deposit program

parimalshah1

6 months ago

What will be the ultimate outcome? Unless jail terms are involved such frauds will keep occurring. Laws are there but execution is pathetic. Is it lack of will or some thing under the table?

r_ashok41

6 months ago

one by one all the scams done by the dhfl group is coming into light.there may be lot of companies exploiting our financial systems and unless our financial system is made foolproof and punishment given with strongest words so that anyone will think twice before doing similar thing.Also the auditors need to be also punished so that in future they do not collide with the company and give false allegations it is like a doctor taking money to give false statements when a murder is happening.