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Regulator Pulls Rs 500 Cr Support, Top Execs Exit
22 Jun
Summary
- Regulator recalled Rs 500 crore refinancing support due to loan classification errors.
- MD and CEO Sachinder Bhinder resigned, replaced by Manu Singh on April 20.
- CFO and CRO were asked to resign on June 15 amid NHB findings.
The National Housing Bank (NHB) has launched a formal investigation into mortgage lender Aavas Financiers following preliminary findings of loan classification irregularities. This has led to the recall of nearly Rs 500 crore in refinancing support by the sector regulator, a move that has triggered a significant leadership shake-up.
Evidence suggests Aavas Financiers miscategorized loans to access preferential funding. Irregularities included classifying ineligible loans under refinancing schemes, misrepresenting borrowers' categories for concessional refinance, and wrongly designating properties in hilly areas. These failures prompted the NHB's stringent action.
As a direct consequence, Managing Director and CEO Sachinder Bhinder was asked to step down, with Manu Singh appointed as the new CEO on April 20. The company confirmed Bhinder's resignation a week later. Additionally, Chief Financial Officer Ghanshyam Rawat and Chief Risk Officer Ashutosh Atre were instructed to resign on June 15.
The company has since appointed Ghanshyam Gupta as interim CFO and Punit Purushottam Agarwal as interim CRO. The extensive executive turnover, including the MD, CEO, CFO, and CRO within two months, highlights the severity of the governance and operational crisis Aavas Financiers is currently facing.
