The Securities and Exchange Board of India (SEBI) has imposed market bans of up to five years and monetary penalties totalling ₹120 crore on six former executives of Dewan Housing Finance Corporation Ltd (DHFL), including its promoters Kapil and Dheeraj Wadhawan, for their involvement in a massive loan diversion scheme.

In a final order issued Tuesday, SEBI found that DHFL, under the leadership of the Wadhawan family and senior management, ran an elaborate fraud from 2006 to 2019. The company extended unsecured loans to a network of shell entities, dubbed “Bandra Book Entities” (BBEs), which were linked to the promoters. These loans, totalling ₹14,040.50 crore by March 2019, were falsely recorded as retail housing loans, bypassing standard due diligence.

Kapil and Dheeraj Wadhawan, who served as CMD and Director, respectively, have each been fined ₹27 crore and banned from accessing the securities market or holding key roles in listed or fundraising companies for five years. Rakesh and Sarang Wadhawan, who held non-executive positions on DHFL’s board, face four-year bans and fines of ₹20.75 crore each. Former JMD and CEO Harshil Mehta and ex-CFO Santosh Sharma have been barred for three years, with fines of ₹11.75 crore and ₹12.75 crore each.

SEBI’s 181-page order describes how DHFL disguised inter-corporate loans as retail credit, using fake loan accounts, a fictitious "Bandra branch," and multiple accounting systems to conceal the diversion. Despite receiving no repayments from BBEs, DHFL continued to book interest income, creating the illusion of profitability and misleading shareholders and the public between FY 2007-08 and FY 2015-16.

Investigators found that ₹5,662.44 crore was disbursed to 39 BBEs, and 40% of that was routed to 48 other promoter-linked entities. SEBI concluded that the fraud was masterminded by Kapil and Dheeraj Wadhawan and enabled by the remaining executives.

The regulator had issued interim restrictions in September 2020. The final order concludes a long-running investigation into one of India’s largest financial scandals in the housing finance sector, marking a strong regulatory response to corporate misconduct.