March 14, 2019 / 10:33 AM / 5 months ago

UPDATE 1-India's Dewan Housing Finance denies report of clean chit by regulator

(Adds details, background, shares)

March 14 (Reuters) - India’s Dewan Housing Finance Corp Ltd (DHFL) denied on Thursday a media report that the country’s housing regulator gave it a clean chit after allegations the mortgage lender had created shell companies to divert funds.

The Economic Times (ET) had reported here on Thursday the National Housing Bank (NHB) has concluded its inspection of DHFL books and is said not to have identified any major deviation.

A consortium of 33 lenders, led by Union Bank of India , was said to have given a clean chit to the company after they heard an independent auditor report in a meeting on Tuesday, the ET report added.

DHFL said in a statement here the meeting was called for "regular agenda items" and to present the report made by auditor T P Ostwal & Associates LLP on the allegations made in a media expose.

An auditor last week dismissed media allegations that DHFL had created shell companies to divert funds, but said the firm’s monitoring of loans was inadequate, raising risks that some of them would turn sour.

“...any interpretation of the outcome of the meeting about giving a clean chit to the company by banks or NHB was neither intended nor mentioned,” DHFL said, adding that it is not privy to the NHB inspection report.

A four-member committee of the regulator is expected to submit its report in the next few weeks, the ET report said.

NHB and Union Bank of India did not immediately respond to Reuters’ request for comment.

DHFL shares rose as much as 6.9 percent on Thursday before giving up some of the gains to close 3.1 percent higher. (Reporting by Krishna V Kurup in Bengaluru; Editing by Subhranshu Sahu and Muralikumar Anantharaman)

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