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No indications to confirm the Cobrapost's allegations on DHFL: Auditor

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India's Dewan Housing Finance Corp (DHFL) did not create shell companies to divert funds, but deviated from internal lending practices which exposes a significant amount of loans to the risk of turning sour, an auditor said in a report. The home loan provider has been under scrutiny since media outlet Cobrapost alleged in January that DHFL diverted loans from Indian state-run lenders to shell companies, including those linked to its controlling shareholders. Its stock has since lost a quarter of its value. DHFL at the time said the Cobrapost report was unfounded and malicious, and that it had engaged lawyers to defend itself. Investors welcomed the report from the auditor, which said it found no evidence to support Cobrapost's allegations, sending DHFL's shares soaring as much as 21 percent before paring gains to trade up 13 percent post noon. Cobrapost did not immediately respond to a request seeking comment. India's shadow banking sector has been under a regulatory cloud since last year when lender Infrastructure Leasing and Financial Service Ltd (IL&FS) witnessed a string of defaults.

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