The encyclopedia · Finance & Accounting · Financial decision · 2019–2021
DHFL faked 260,000 loans and collapsed with ₹87,000 crore in debt
DHFL, India's second-largest housing finance company, faked 260,000 home loans and siphoned ₹31,000 crore. The RBI took over and the company collapsed.
Dewan Housing Finance Corporation · 2019-11-20
What happened
Dewan Housing Finance Corporation (DHFL) was incorporated in 1984 and grew to become India's second-largest housing finance company, focused on affordable housing loans. By 2019 it owed approximately ₹87,000 crore to banks and bondholders, including State Bank of India, LIC, and Union Bank of India.
In January 2019, Cobrapost alleged the company had siphoned ₹31,000 crore through shell companies. DHFL defaulted on debt repayments in June 2019, and its stock fell over 97%. The RBI superseded DHFL's board in November 2019 — the first time it invoked the Insolvency and Bankruptcy Code against a financial services provider.
The CBI later found that DHFL had created 260,000 fake home loan accounts under India's affordable housing scheme to claim subsidy funds, routing ₹11,755 crore to shell companies. Promoter Kapil Wadhawan was arrested. The company was sold to Piramal Group for ₹34,250 crore in September 2021 — less than half its outstanding debt.
Why it happened
- DHFL created 260,000 fake home loan accounts to claim government subsidies, routing the money to shell companies controlled by its promoters.
- The company owed ₹87,000 crore to banks and bondholders when it defaulted in June 2019, making it one of India's largest financial defaults.
- The RBI had to intervene and supersede the board — the first such action against a financial services company — because the governance failures were so severe.
The lesson
DHFL was allowed to create 260,000 fake loan accounts and siphon billions because nobody checked. When a financial company's books are fiction, the entire system pays.
Aftermath
DHFL was acquired by Piramal Group for ₹34,250 crore in September 2021 and renamed Piramal Finance Limited. The CBI filed a ₹34,615 crore bank fraud case against the company. Promoter Kapil Wadhawan was arrested under the Prevention of Money Laundering Act. The Enforcement Directorate attached assets worth ₹186 crore in September 2025. The case highlighted the fragility of India's housing finance sector and led to tighter regulatory scrutiny of non-banking financial companies.
Sources
- Dewan Housing Finance Corporation — Wikipedia
- SEBI bans Wadhawans, imposes ₹120-crore penalty for DHFL fraud — The Hindu Business Line
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