SRG housing loans worth Rs 400 crore may be fictitious: National Housing Bank

Mumbai: (NHB) has red-flagged its exposure to Rajasthan-based after an found suspected fictitious loan accounts of about ₹300-400 crore in the books of the lender, two people familiar with the development said.

The phantom accounts and suspected irregularities amount to roughly a third of SRG Housing Finance’s reported loan book. The company had assets under management of ₹1,076 crore as of June, up 35% year-on-year, according to its latest investor disclosures.

“NHB found loans that had been shown as disbursed but where the underlying customers could not be established,” said one of the persons, who did not wish to be identified. “There were no corresponding assets in several of these accounts.”

The investigation also found instances of alleged evergreening and manipulation of non-performing assets, while funds purportedly disbursed against some of the suspect accounts were allegedly routed back to promoter-linked entities, the people said.

NHB has classified the account as a Red Flagged Account (RFA) and reported the status on the Reserve Bank of India’s Central Repository of Information on Large Credits (CRILC), they said.

SRG did not respond to ETs queries.

An RFA does not by itself constitute a declaration of fraud. Under RBI’s fraud-risk-management framework, an account is red-flagged when one or more early-warning signals raise suspicion of fraudulent activity and trigger a deeper investigation. An account meeting the CRILC reporting threshold must be reported within seven days of being classified as RFA, while the process of either declaring it fraud or removing the red flag is ordinarily required to be completed within 180 days.

SRG Housing Finance is promoted and managed by Vinod Kumar Jain, its managing director. The promoter group owned 59.02% of the listed lender at the end of June. Jain individually held about 20.5%, while Chief Executive Archis Jain and Seema Jain were also among the major promoter shareholders.

Established in 1999, the Udaipur-headquartered company says it was the first housing finance company in Rajasthan to be registered with NHB, receiving its registration in 2002. It focuses largely on rural and semi-urban affordable housing and had 96 branches and more than 25,000 customers as of June.

The alleged irregularities contrast with the asset-quality numbers reported by the lender. SRG reported gross non-performing assets (NPAs) of 1.73% and net NPAs of 0.63% for the June quarter, while profit after tax rose 25% to ₹8.47 crore. Its capital adequacy ratio stood at 39.21%.

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. It is backed by a diversified lender pool that includes banks, financial institutions and NHB.

The development comes 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. NHB first conducted a snap audit and subsequently a forensic audit. 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.