A housing finance company has disclosed that a financial sector regulator instructed it to recognise additional bad loans amounting to Rs 933 crore for the period ending March 2023, following a supervisory inspection.
Initially, the company had reported gross non-performing assets (NPAs) of Rs 2,271.36 crore for that period. However, during the inspection, the regulator identified additional stressed assets of Rs 933.58 crore that were not classified correctly. This resulted in the company’s total gross NPAs rising to Rs 3,204.94 crore for the same reporting period.
Reason for the divergence
The discrepancy arose due to loan restructuring carried out during the financial year 2022–23, which the regulator later determined did not comply with applicable regulatory norms. The issue was linked to two project finance loan accounts.
In these cases, the company had reduced the interest rates on the loans for competitive business reasons. At the time of restructuring:
- Both loan accounts were classified as standard assets
- All repayments were regular
- There were no payment defaults
However, under regulatory guidelines, such restructuring did not qualify for continued standard classification, leading to a retrospective reclassification during the inspection.
Current status of the loans
- One loan account, originally amounting to Rs 598.39 crore, has since been fully repaid
- The second loan, which was significantly larger earlier, has now been reduced to Rs 67.39 crore
- The remaining loan continues to be serviced regularly and has not shown signs of stress
Financial impact
The company clarified that:
- There is no immediate financial impact arising from this disclosure
- The affected exposure has largely been resolved or reduced
- The disclosure is being made purely for transparency and governance purposes
The company emphasized that the announcement reflects its commitment to strong governance standards and regulatory compliance, rather than a deterioration in asset quality or ongoing credit risk.
