The National Housing Bank (NHB) is set to double the total refinance and affordable housing funds available to large housing finance companies this fiscal year, following multiple requests from companies seeking cheaper, long-term funding options. According to officials familiar with the discussions, LIC Housing Finance, Bajaj Housing Finance, PNB Housing Finance, Aadhar Housing Finance and TruHome Finance are among the companies that could benefit from this increased allocation. The funding is expected to help reduce reliance on banks while promoting growth in housing loans, with NHB potentially meeting 30-35% of borrowing raised by some HFCs this year, compared with 20-25% last year. Officials noted that raising fresh bank loans can become difficult when a bank reaches its internal exposure limit for lending to NBFCs and HFCs, making NHB's cheaper refinance rates particularly attractive to mortgage lenders. Officials put the rate on regular NHB refinance at about 7.65% and on affordable housing funds at about 4.25%, both cheaper than comparable bank funding.
The National Housing Bank (NHB) has launched a comprehensive forensic investigation into SRG Housing Finance to establish whether fictitious loans were created in the company's books. According to reports from The Economic Times, NHB issued a request for proposal on October 3 to audit a non-deposit-taking housing finance company based in Udaipur. The tender does not name SRG, which is headquartered in the city, but people familiar with the matter identified it as the lender under scrutiny. NHB has yet to appoint an audit firm, with bids closing on October 13. As per The Economic Times, the audit will establish whether the borrowers and loans are genuine, how the accounts and repayment entries were created or changed, and whether the same loans were offered as security to multiple lenders. The investigation comes amid growing concerns over dubious lending practices in the housing finance sector.
The investigation builds on earlier findings that flagged possible fictitious loans ranging from ₹300 to ₹400 crore, representing roughly a third of SRG's reported loan book. As reported by The Economic Times, the suspected accounts amounted to roughly a third of its reported loan book. SRG Housing Finance had assets under management of ₹1,076 crore as of June, up 35% from a year earlier, according to its investor disclosures. The audit will examine whether the same borrower, security or receivable was pledged or represented to multiple lenders, and identify any fictitious accounts offered as security for NHB refinance. According to The Economic Times, the forensic audit will test the earlier findings and quantify the financial impact of any irregularities found.
According to The Economic Times, NHB wants the auditor to "identify and investigate fictitious, dummy, non-genuine or unsupported loan accounts appearing in the books" and establish whether the named borrowers exist. The shortlisted audit firm will investigate the company's loan origination and accounting systems, inspecting access controls and electronic logs for creation, deletion, alteration or backdating of loan accounts, customer records, EMI payments and non-performing asset classifications. The auditor must conduct an independent, loan-by-loan assessment of non-performing assets as of March 31, 2025, and March 31, 2026, including a review of overdue amounts, reversals, restructuring and subsequent recoveries. As per The Economic Times, auditors have been asked to examine unusual user activity and system overrides, and check customer identification records, sanctions, disbursements, bank accounts, loan documents, repayment trails and the use of funds.
In a September 10 stock exchange filing, SRG Housing Finance said an NHB inspection was underway as part of the regulator's routine oversight. According to The Economic Times, it denied the allegations, stating, 'There has been no creation or maintenance of fictitious accounts by the company, nor has any amount been diverted for any purpose'. The selected audit firm will have 10 working days to conduct the audit in Udaipur and another 10 working days to submit its report. The investigation will also examine whether stressed loans were shown as standard assets to lenders and verify files for accounts in which earlier observations had flagged false EMI collection postings.
