RBI cracks down on Aviom India Housing Finance, supersedes board

The Reserve Bank of India (RBI) has superseded the board of Aviom India Housing Finance Private Limited due to governance concerns and defaults in meeting payment obligations. The central bank plans to initiate resolution proceedings under the Insolvency and Bankruptcy Code (IBC) and will apply to the National Company Law Tribunal (NCLT) for formal proceedings.

In a statement, the central bank said: "The Reserve Bank has today superseded the board of directors of Aviom India Housing Finance Private Limited (the company) owing to governance concerns and defaults in meeting various payment obligations and has appointed Shri Ram Kumar, ex-CGM of Punjab National Bank, as the Administrator under Section 45-IE(2) of the Reserve Bank of India Act, 1934."

The statement further noted: "The Reserve Bank intends to shortly initiate the process of resolution of the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019, and would also apply to the NCLT, New Delhi, for appointing the Administrator as the Insolvency Resolution Professional."

Aviom, a Delhi-based housing finance company, began its operations in August 2016. As of March 31, 2024, the company operated a network of 268 branches, with assets under management (AUM) amounting to ₹17.52 crore. The company primarily focuses on providing loans for sanitation, home extensions, home improvement, construction, and loans against property (LAP) to low-income families in the informal sector, with a strong emphasis on empowering women.

On a fully diluted basis, as of March 31, 2024, the promoter Kajal Ilmi and her family held a 31.4% stake in the company. Other significant stakeholders include Nuveen (35.06%), Gojo and Company Inc. (19.84%), SABRE Partners AIF Trust (9.88%), and Capital 4Development Asia Fund Cooperative UA (3.78%).

According to India Ratings' July 22, 2024, report, Aviom relies entirely on in-house sourcing and collection with a low-ticket size, necessitating substantial on-ground efforts and resulting in high operating costs. Despite these challenges, the company recorded a profit of ₹45.8 crore in FY24, a significant increase from ₹16.1 crore in FY23. The profit surge was attributed to the upfront booking of gains realised on the direct assignment portfolio (sale of loans).