NEW DELHI: The Ministry of Finance has directed all the three top lenders of Dewan Housing Finance Corporation (DHFL) to start forensic audit of the company’s book of accounts, post-emergence of “allegations” regarding fund diversions.
“Letters have been issued to all the top three lenders including Bank of Baroda, State Bank of India and Union Bank of India to start the forensic audit of the books of accounts,” a senior finance ministry official told this publication.
However, the official clarified that this is only the general procedure followed when such allegations come up. “This is the standard procedure. If the accounts are clean, there is nothing to worry,” the official said.
The forensic audit will help the Public Sector Banks to find out whether the bank loans given to DHFL were used to fund legitimate business or if they were used otherwise. As per RBI rules, the banks are required to monitor end-use of funds to prevent misuse of public deposits, which are loaned out by banks.
So far, Bank of Baroda has initiated a forensic audit of loans to DHFL and has appointed KPMG for the job. The SBI and Union Bank of India are yet to appoint an auditor.
Meanwhile, shares of DHFL bounced back on Thursday, a day after DHFL CEO Harshil Mehta resigned from the company. After an initial slip, the shares bounced back after DHFL underplayed the impact of Mehta’s resignation and quickly recommended appointment of Sunjoy Joshi as an independent director and Srinath Sridharan as a non-executive director.
DHFL also added that Mehta would continue to be associated with the company and shall hold the designation of executive president-retail business with effect from February 14, 2019.
The company had on Monday said that it had received a notice from the Income-Tax Department seeking clarifications on certain aspects of the books of accounts of DHFL.