Ministry of Home Affairs (MHA) has issued lookout notice against promoters of Dewan Housing Finance Corporation (DHFL) in connection with allegations of financial fraud by promoters of the company, said sources familiar with the matter. News portal Cobra Post had in January accused that DHFL promoters through layers of shell companies allegedly siphoned off Rs 31,000 crore out of the total bank loans of Rs 97,000 crore.

According to sources, an investigation by the Ministry of Corporate Affairs (MCA) has found that addresses provided by DHFL subsidiaries and its associated companies did not exist.

However, DHFL denied receiving any communication from the government with reference to lookout notice.

Last week, MCA had asked MHA to issue lookout notice against DHFL promoters to preventing them from leaving India till the investigation completes, sources told CNBC-TV18, requesting anonymity.

The expose by Cobra Post alleged that the scam has been pulled off mainly by sanctioning and disbursing astronomical amounts in secured and unsecured loans to dubious shell or pass-through companies related to DHFL's primary stakeholders Kapil Wadhawan, Aruna Wadhawan and Dheeraj Wadhawan.

It alleged that this was done through their proxies and associates, which have in turn passed the money on to the companies controlled by the Wadhawans.

In a bid to avoid economic offenders from a potential flight risk, the MCA is understood to have suggested over 20 names against whom look out circulars (LOCs) have been issued, a senior government official had told CNBC-TV18 on Sunday. The government has decided to tighten the noose around companies, promoters, directors involved in serious fraud and irregular transactions.

The LOCs will be based on suspicion on tightening of fund, said the sources, adding that the MCA will follow an SOP to deal with such cases. The LOCs will be valid until the cases go to the court.

At 2.45 PM, DHFL shares were trading 4.3 percent lower at Rs 114 per share on the NSE. Intraday, DHFL’s stock price fell as much as 7 percent to Rs 110.75 per share. The stock has declined 54 percent this year and 82 percent in the last one year.

First Published:May 28, 2019 2:25 PM IST