NHB Surprise Inspections of HFCs After Aviom Fraud Case
Why in the news
The National Housing Bank (NHB) stepped up unannounced checks on housing finance companies (HFCs) after the Aviom Housing Finance fraud, adding them to its annual credit reviews.
Key facts
- Focus: proper use of refinance funds, honest bad-loan reporting, checks on investment portfolios, and clear affordable-housing disclosures on borrower eligibility.
- Aviom case: the firm flagged possible payment delays owing to fraudulent records; NHB found manipulated mutual fund statements on site and ordered a third-party forensic audit.
New rules
| Area | Earlier | Now |
|---|---|---|
| Bad-loan data | Submitted on the 10th-12th each month | Reported on the 1st of each month |
| Bundled insurance (10 Dec 2024) | Sold without full disclosure | Explicit borrower consent needed |
| Insurance choice (12 Mar 2025) | Single provider | Options from at least two providers |
Concerns
- Some lenders delayed recognising bad loans by carrying overdue payments into the next month.
- Rising insurance income within net interest earnings hints at possible misselling.
Exam angle
- Regulator of HFCs: National Housing Bank.
- Case that triggered action: Aviom Housing Finance.