The Securities and Exchange Board of India (SEBI) has taken decisive action against key figures involved in a massive fund diversion case at Dewan Housing Finance Corporation Ltd (DHFL). In an order released on Tuesday, August 12, 2025, the capital markets regulator has banned Kapil Wadhawan, former Chairman and Managing Director, and Dheeraj Wadhawan, ex-director, along with four other individuals, from accessing the securities market for a period of up to five years. SEBI has also imposed a total penalty of ₹120 crore on them for their roles in diverting funds and fabricating books.

In addition to the ban from the securities market, the individuals are also barred from holding any key managerial positions in listed companies, registered intermediaries, or public companies intending to raise funds from the market for the duration of their respective bans.

The individuals facing bans of varying lengths are: * Kapil Wadhawan (former CMD): 5-year ban * Dheeraj Wadhawan (ex-director): 5-year ban * Rakesh Wadhawan (former non-executive chairman): 4-year ban * Sarang Wadhawan (former non-executive director): 4-year ban * Harshil Mehta (former Joint Managing Director & CEO): 3-year ban * Santosh Sharma (former CFO): 3-year ban

In addition to the market bans, SEBI has levied significant fines on each of the individuals: * Kapil Wadhawan: ₹27 crore * Dheeraj Wadhawan: ₹27 crore * Rakesh Wadhawan: ₹20.75 crore * Sarang Wadhawan: ₹20.75 crore * Harshil Mehta: ₹11.75 crore * Santosh Sharma: ₹12.75 crore

SEBI's investigation revealed a complex scheme orchestrated by the Wadhawan brothers to siphon off funds from DHFL. The diverted funds were then misrepresented as retail housing loans. The investigation found that loans worth ₹5,662.44 crore were disbursed to 39 "Bandra Book Entities" (BBEs), entities linked to the promoters. Subsequently, 40% of these funds were routed to 48 other entities also connected to the promoters. By March 31, 2019, DHFL's loans to BBEs had reached a staggering ₹14,040.50 crore.

According to SEBI, DHFL, along with its promoters, directors, and key managerial personnel, engaged in an "egregiously fraudulent scheme" since 2006 to divert funds to these BBEs. The promoters allegedly issued huge unsecured loans to these entities, despite their lack of assets or business, bypassing all due diligence and falsely recording them as retail housing loans.

The investigation also revealed that DHFL booked fictitious interest income despite the BBEs not making interest or principal payments. This allowed the company to show increasing profits instead of losses between the financial years 2007-08 and 2015-16. SEBI stated that the publication of false financials misled stakeholders and distorted DHFL's share price, inducing investors to remain invested under the belief that "all was well" at DHFL.

DHFL, once a prominent housing finance company providing loans for home construction, purchase, and loans against property, faced severe financial difficulties. In 2021, it was acquired by the Piramal Group for ₹34,250 crore and subsequently merged with Piramal Capital Housing Finance. Its shares were delisted from the National Stock Exchange and the Bombay Stock Exchange in June 2021.