CBI probe into the banking fraud had earlier linked certain suspects with the underworld, especially Pakistan-based gangster Chhota Shakeel, officials said on Saturday.
The central probe agency has found material showing that public funds were diverted to people allegedly linked to Shakeel, they said.
In connection with its probe into the DHFL scam, the Central Bureau of Investigation (CBI) carried out searches on Friday at three locations in Mumbai and Pune, from where it recovered a painting and sculptures worth over ₹40 crore, they said.
The CBI on Friday seized two paintings by famous artists Tyeb Mehta and Manjit Bawa, valued at ₹34.7 crore, during its searches at three locations in connection with alleged banking fraud of ₹34,615 crore by DHFL, officials said.
The paintings -- "Bull" by Tyeb Mehta worth over ₹27 crore and an untitled piece by Bawa estimated to be over ₹7.7 crore -- were among a large number of paintings and sculptures -- altogether valued at ₹40 crore -- cash and other incriminating documents seized during the latest searches, the CBI said in a statement.
During the searches at the premises of Ajay Ramesh Nawandar in Mumbai, the CBI seized a huge collection of uber-luxury watches worth crores of rupees, including Rolex Oyster Perpetual, Cartier, Omega and Hublot Michael Kors, the officials said.
The agency also carried out searches at the flats of Rebecca Dewan at Khar West in Mumbai. The flats worth ₹8 crore are believed to have been purchased by Kapil Wadhawan of Dewan Housing Finance Limited (DHFL).
The agency is likely to expand its probe against Nawandar and his business associates to follow the money trail of the funds diverted by DHFL's Kapil and Dheeraj Wadhawan, they added.
"During investigation, it was found that the promoters had allegedly diverted the funds and made investments in various entities. It was also alleged that the promoters had acquired expensive paintings and sculptures worth about ₹55 crore using the diverted funds," the CBI said in a statement.
The CBI had on 22 June, booked the Dewan Housing Finance Corporation Ltd (DHFL), Kapil Wadhawan, the then CMD, Dheeraj Wadhawan, the director and six realtor companies for allegedly being part of criminal conspiracy to cheating the consortium led by the Union Bank of India to the tune of ₹34,615 crore.
An audit of DHFL's account books showed that the company allegedly committed financial irregularities, diverted funds, fabricated books and round-tripped funds to "create assets for Kapil and Dheeraj Wadhawan", using public money.
The CBI acted on a complaint from the Union Bank of India (UBI), the leader of a 17-member lender consortium that had extended credit facilities to DHFL to the tune of ₹42,871 crore between 2010 and 2018.
The bank has alleged that Kapil and Dheeraj Wadhawan, in a criminal conspiracy with others, misrepresented and concealed facts, committed criminal breach of trust and abused public funds to cheat the consortium to the tune of ₹34,614 crore by defaulting on loan repayments from May 2019 onwards.