PNB Fraud Scam:
DHFL Fraud has been in the news for over last two years now. But today, another bank declared losses due to frauds by DHFL.
India’s second-largest lender Punjab National bank declared that they had exposures of Rs.3688 crore to DHFL.
“A fraud of Rs 3,688.58 crore is being reported by the bank to RBI in the accounts of DHFL. The bank has already made provisions amounting to Rs 1,246.58 crore, as per prescribed prudential norms, PNB said in an exchange filing today evening.
While the ED is probing on exact modus operandi the broader counters of the frauds are known, the tainted group deployed the following tricks to defraud banks.
1) Loans to Shell Companies:
Shell companies are pass-through entities. This means that they are not the final destination of the money. This means that DHFL was putting money into these companies and then showing some false transactions to route it ahead. Reports indicated that DHFL has lent out close to $1.5 billion in unsecured loans to these companies. These loans have no assets, and also, the promoters have not given any guarantees. Which means that all the public money has gone to companies which have no business
2) Round Tripping
The loans to the above shell companies were then being given back to individual companies of promoters. Thus the public money is not only given to shell companies but now has landed in the hand of promoters
3) Fraud Borrowers
To further make the round-tripping more complex DHFL was creating fraud borrowers who were given loans into accounts which never existed.
4) Foreign Assets
To make tracking hard the money the were utilising the money to buy properties outside India using tax havens, where the Indian government Has limited jurisdiction. Inte