A PIL submitted in the Delhi HC by a civil society group – The Citizens Whistle Blower Forum (CWBF) asserts that Indiabulls Housing Finance Limited (IBHFL), along with corporates like the Reliance ADA Group and the DLF group, intends to “create private wealth out of public money” by extending loans worth billions of rupees to these large businesses through a complex maze of shell companies. These loans were advanced to companies having a considerably low paid-up capital (Rs. 100,000).
The petition claimed that the borrowing companies bestowed huge benefits to the key shareholders and the Chairman of IBHFL. Five corporates – Reliance ADA Group, DLF Group, Vatika Group, Americorp, and subsidiaries of the Chordia Group received loans worth Rs. 94.28 billion.
Citing similarities with the scams as those carried out by ICICI Bank and Dewan Housing Finance, the PIL terms these transactions as “round-tripping”. Some companies even capitalized the borrowed funds back into the Indiabulls Group as equity investments.
When asked to comment, IBHFL said that the PIL had not been filed and that this was just a ploy to negatively impact its share prices. Do you think the petition holds merit or was this just another publicity stunt?