In the biggest-ever loan fraud case in India, CBI has registered a case against Kapil Wadhawan and Dheeraj Wadhawan of DHFL for allegedly cheating a consortium of 17 banks led by the Union Bank of India to the tune of Rs 34,615 crore, making it the biggest banking fraud probed by the agency, officials said.

The agency, sources said, is conducting searches at 11 locations across the country at premises associated with the accused.

The CBI case has been registered on a complaint from Union Bank of India (UBI), which is the lead bank in the consortium. As indicated by the UBI complaint, starting around 2010, the DHFL has expanded credit facilities of over Rs 42,000 crore by the consortium of which Rs 34,615 crore remain outstanding. The loan was announced NPA in 2019 and fraud in 2020.

The bank has alleged that Kapil and Dheeraj Wadhawan in a criminal scheme with others, distorted and disguised truth, committed a criminal breach of trust and manhandled public assets to swindle the consortium to the amount of Rs 34,614 crore by defaulting on credit reimbursements from May 2019 onwards.

The review of DHFL account books showed that the organisation purportedly dedicated monetary inconsistencies, redirected funds, fabricated books, and round-tripped assets to "create assets for Kapil and Dheeraj Wadhawan" using public money.

Both are in judicial custody regarding previous fraud cases against them.

According to the KPMG report, most of the transactions of such entities/individuals were like investments in land/properties.

Apart from Wadhwans, the CBI has booked Sudhakar Shetty of Suhana Group and 10 other real estate companies.

The UBI has alleged that the KPMG audit indicates “significant financial irregularities, diversion of funds through related parties, fabrication of books to show fraudulent non-existent retail loans, round-tripping of funds and utilisation of diverted amounts for creation of assets by Sh. Kapil Wadhawan, Sh. Dheeraj Rajesh Kumar Wadhawan and their associates.”

The scrutiny of account books showed that 66 entities having commonalities with DHFL promoters were disbursed Rs 29,100 crore against which Rs 29,849 crore remained outstanding.

"Most of the transactions of such entities and individuals were like investments in land and properties," the bank alleged.

It uncovered that the DHFL, on several occasions, dispensed assets within one month, redirected assets for investments in entities of Shetty, credits were turned over without NPA classification, reimbursements worth many crores were untraceable in bank statements and an unjustified moratorium on principal and interest was given.

Another major outstanding in DHFL accounts was Rs 11,909 crore emerging out of credits and advances worth Rs 24,595 crore given to 65 entities between April 1, 2015, and December 31, 2018.

The DHFL and its promoters additionally dispensed Rs 14,000 crore as Project Finance however reflected the same as retail loans in their books.

"This led to creation of an inflated retail loans portfolio of 1,81,664 false and non-existent retail loans aggregating Rs 14,095 crore outstanding.

The loans referred to as "Bandra Books" were maintained in a separate database and subsequently merged with Other Large Project Loans (OLPL).

"It was revealed that OLPL category was largely carved out of the aforesaid non-existent retail loans amounting to Rs 14,000 crore, out of which Rs 11,000 crore was transferred to OLPL loans and Rs 3,018 crore was retained as a part of the retail portfolio as unsecured retail loans," it alleged.

The DHFL, its directors and executives continued lying that they were attempting to de-stress the organisation through different means like securitisation of a pool of housing loans, project loans, and divestment of promoters' stake in the organisation, they said.

Kapil Wadhawan kept on maintaining that DHFL has a half year of money liquidity and would remain cash surplus even after considering all repayment obligations, the bank alleged.

After having "falsely assured" lenders, the DHFL delayed interest payment obligations to terms loans in May 2019 which continued thereafter with account declared non-performing assets, they said.