RBI to Put Aviom India Housing Finance Under Insolvency: Why the Regulatory Action

The Reserve Bank of India (RBI) plans to put Delhi-based housing mortgage lender Aviom India Housing Finance Pvt Ltd under insolvency proceedings after superseding its board of directors on January 27. The Indian banking regulator exercised its powers under Section 45-IE(1) of the RBI Act, 1934, citing concerns over governance and debt issues at Aviom India Housing Finance.

"The Reserve Bank has today superseded the board of directors of Aviom India Housing Finance Private Limited (the company) owing to governance concerns and defaults in meeting various payment obligations, and appointed Shri Ram Kumar, ex-Chief General Manager of Punjab National Bank, as the Administrator under Section 45-IE(2) of the Reserve Bank of India Act, 1934," the central bank said.

Further, it intends to initiate the process of insolvency and will also apply to the National Company Law Tribunal (NCLT), New Delhi, for appointing Administrator Kumar as the Insolvency Resolution Professional.

The sudden RBI move came a couple of months after the firm's auditor flagged potential discrepancies in the company's books.

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Irregularities at Aviom

Founded in February 2016, Aviom provides home loans and loans against property to low-income women borrowers in Tier II and Tier III towns. As of March 2024, the lender operates 268 branches with assets under management (AUM) totaling ₹17.52 crore. The company's promoters, Kajal Ilmi and her family, hold a 31.4% stake, while other investors include Nuveen, Gojo and Company Inc, SABRE Partners AIF Trust, and Capital 4Development Asia Fund Cooperative UA.

In November last year, Aviom India Housing Finance revealed that its current statutory auditors, S.N. Dhawan & Co. LLP, had raised concerns about potential discrepancies in the company's books of accounts. Additionally, the company's former auditors, SCV & Co. LLP, asked Aviom to immediately stop using their auditor's report. Aviom also reported a fraudulent incident to the National Housing Bank (NHB) and filed a complaint with the Economic Offences Wing (EOW).

The company reportedly wrote to its creditors that it may have to delay payments on certain obligations. According to a CNBC TV18 report, Aviom said that it is undergoing an audit by an independent third-party forensic auditor. The letter also mentioned irregularities in the statement of accounts of mutual fund(s), which appeared to be manipulated. On November 27, CRISIL Ratings downgraded Aviom's debt to "CRISIL C" from "CRISIL BBB+/Stable".