The audit report of TP Ostwal and Associates on housing finance company, DHFL, found the firm has not promoted any of the 26 shell companies to divert funds as alleged by a news agency. Moreover, the promoters of DHFL do not have any shareholding in the 26 companies nor do the 26 companies hold any stake in the housing finance company. The audit report also found no evidence of tax fraud against DHFL. However, the report finds that some of the loans disbursed to real estate developers involved in slum rehabilitation projects may have been used to purchase shares of Darshan developers from Kyta Advisors.

DHFL sanctioned and disbursed loans to the tune of Rs 2,000 crore to Notion Real Estate Private Limited, Earleen Real Estate Developers Private Limited, Prashul Real Estate Private Limited, Edweena Real Estate Private Limited as project loans for SRA development.

“Our examination of available financial statements of Darshan Developers indicates that the shareholding has indeed undergone a change during the period of our review and it is highly probable that certain amounts lent to the 4 companies may have been used to purchase shares of Darshan Developers aggregating to INR 1,424.16 crores from Kyta Advisors and other instruments worth INR 299.28 crores (total INR 1,723.44 crores)”, the audit report on DHFL mentioned.

A large part of the allegations levelled by a news agency pertained to the loans disbursed by the housing finance company to developers who were involved in slum rehabilitation projects. As of December 2018, loans disbursed to slum rehabilitation projects is to the tune of Rs 7,021 crore.

The independent audit report is on 39 of the 64 allegations levelled against the housing finance company by a news agency.

Certain lapses and departures from the standard operating procedures and policies laid by the company have been identified in the report. These lapses point to a deficiency in the adherence with policies in several instances - the risk of which needs to be examined by the company.

"Though the company is required to monitor post disbursal end use of funds by the borrowers, our examination indicates the monitoring in respect of 15 borrowers (loans amounting to Rs 7,485 crore) is significantly inadequate," added report.

The report further mentions that the finance committee that sanctions loans above Rs 200 crore consists of promoter Kapil Wadhawan ,Dheeraj Wadhawan and one independent director.

“The promoter directors can be said to have significant influence in the loan sanction process for loans exceeding INR 200 crores”, the report said.