SRG Housing Finance shares plunged 20% on Thursday, extending a sharp selloff after reports raised concerns over allegedly fictitious loan accounts at the affordable housing lender. The stock fell to an intraday and weekly low of ₹195, down ₹54.70, or 21.91%, from the previous level of ₹249.70. According to NDTV Profit, the selloff followed a report that the National Housing Bank (NHB) had raised concerns over suspected fictitious loan accounts worth around ₹300-400 crore at SRG Housing Finance. However, in an exchange filing dated September 10, SRG Housing Finance rejected the allegations and described the reports as distorted and misleading. The company categorically denied creating or maintaining fictitious accounts or diverting funds for any purpose.
The National Housing Bank (NHB) has raised concerns over SRG Housing Finance, identifying potentially fictitious loan accounts worth ₹300-400 crore in the lender's books. According to reports from The Economic Times, the phantom accounts and suspected irregularities amount to roughly one-third of SRG Housing Finance's reported loan book. The company had assets under management of ₹1,076 crore as of June, representing a 35% year-on-year growth. As per The Economic Times, NHB found loans that had been shown as disbursed but where the underlying customers could not be established, with no corresponding assets in several of these accounts. The investigation also uncovered instances of alleged evergreening and manipulation of non-performing assets, while funds purportedly disbursed against suspect accounts were allegedly routed back to promoter-linked entities.
In its exchange filing dated September 10, SRG Housing Finance strongly denied the allegations and said it has not received any communication from NHB's Refinance Department regarding red flags on any loan accounts. The company acknowledged that an NHB inspection is currently underway, but said such periodic regulatory inspections are part of the normal supervisory framework for housing finance companies and should not, by themselves, be interpreted as an adverse finding. According to NDTV Profit, the company emphasized that it has not received any formal regulatory communication regarding the alleged irregularities. An RFA does not by itself constitute a declaration of fraud under RBI's fraud-risk-management framework, with accounts red-flagged when one or more early-warning signals raise suspicion of fraudulent activity.
Despite the alleged irregularities, SRG Housing Finance reported gross non-performing assets of 1.73% and net NPAs of 0.63% for the June quarter, while profit after tax rose 25% to ₹8.47 crore. The company's capital adequacy ratio stood at 39.21%, indicating strong capital buffers. The alleged irregularities contrast with the asset-quality numbers reported by the lender. The company is backed by a diversified lender pool that includes banks, financial institutions and NHB.
According to The Economic Times, SRG Housing Finance, established in 1999, is headquartered in Udaipur and claims to be the first housing finance company in Rajasthan to be registered with NHB, receiving its registration in 2002. The company focuses on rural and semi-urban affordable housing and had 96 branches and more than 25,000 customers as of June. The promoter group owned 59.02% of the listed lender at the end of June, with Vinod Kumar Jain individually holding about 20.5%, while Chief Executive Archis Jain and Seema Jain were also among the major promoter shareholders. The company had crossed the ₹1,000-crore assets under management milestone in 2025-26, when its loan book expanded 37% and profit increased 33% to ₹32.49 crore.
The alleged irregularities at SRG Housing Finance come amid heightened supervisory scrutiny of smaller housing finance companies following irregularities at Aviom India Housing Finance and Star Housing Finance. At Aviom, whistleblower complaints had alleged manipulation of accounts, window-dressing of NPAs, fake disbursements, fictitious collections and bogus investments. The Reserve Bank of India superseded Aviom's board in January 2025 citing governance concerns and payment defaults, and the company subsequently entered insolvency proceedings.
