NHB Pulls Rs 500 Cr Support From Aavas as CEO Steps Down

The National Housing Bank recalled roughly Rs 500 crore in refinancing support from Aavas Financiers after finding lapses in the company's loan classification, the Economic Times reported. The punitive action landed days before a leadership change. Managing director and CEO Sachinder Bhinder resigned effective immediately. Manu Singh, the former home loans head at Kotak Mahindra Bank, took over on April 20.

The NHB probe centers on how Aavas categorized certain loan accounts. Misclassification of non-performing assets would mean the company understated its true stress and the required provisioning. That gap can force higher charges against earnings and pressure capital adequacy ratios. It could also trigger lending restrictions from a regulator that already flagged the issue.

The recall of refinancing support is the clearest signal of NHB discomfort. Those funds, drawn from the regulator's refinance window, helped Aavas manage its lending pipeline. Losing access to nearly Rs 500 crore of that backstop creates a funding hole the company must fill through bank lines and securitization. The timing compounds the problem. Housing finance companies rely on this window most heavily during high-disbursement quarters.