RBI suspends board of Aviom India Housing Finance; to start insolvency proceedings
In a significant regulatory move, the Reserve Bank of India (RBI) has superseded the board of directors of Aviom India Housing Finance Private Limited due to governance concerns and defaults in meeting payment obligations. The action has been taken under Section 45-IE(1) of the Reserve Bank of India Act, 1934, based on the recommendation of the National Housing Bank (NHB).
Shri Ram Kumar, a former Chief General Manager (CGM) of Punjab National Bank, has been appointed as the Administrator under Section 45-IE(2) of the RBI Act. The RBI has announced its intention to initiate the resolution process for the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019. The central bank also plans to apply to the National Company Law Tribunal (NCLT), New Delhi, for appointing the Administrator as the Insolvency Resolution Professional.
Company Profile and Operations
Founded in August 2016, Aviom India Housing Finance is a Delhi-based housing finance company with a focus on providing loans for sanitation, home extension, home improvement, construction, and loan against property (LAP) to low-income families, primarily women. The company operates in underserved segments of the market, targeting customers from the informal sector with self-occupied residential properties as collateral.
As of March 31, 2024, the company operated 268 branches across 13 states, with Madhya Pradesh and Uttar Pradesh accounting for 50% of its portfolio. Aviom’s Assets Under Management (AUM) stood at ₹1,752 crore in FY24, with 78% comprising home loans and 22% LAP. The company grew its AUM at a compound annual growth rate (CAGR) of 55.6% between FY21 and FY24.
Leadership and Shareholding
The company is led by Ms. Kajal Ilmi, who has over two decades of experience in real estate and housing. Ms. Ilmi and her family hold a 31.4% stake in Aviom, while key institutional investors include Gojo and Company Inc, SABRE Partners AIF Trust, Capital 4 Development Asia Fund Cooperative UA, and Teachers Insurance and Annuity Association of America (TIAA).
In FY24, Aviom raised ₹331 crore through equity and compulsory convertible preference shares, with ₹75 crore infused during the fiscal year. This increased its equity capital base to ₹400 crore from ₹286 crore in FY23.
Challenges and Regulatory Intervention
Despite its rapid growth and niche market positioning, Aviom faced governance challenges and failed to meet its payment obligations. This prompted the RBI to intervene and take control of the company’s operations. The resolution process, expected to be overseen by the NCLT, will determine the company’s future.
This development marks a crucial step in addressing governance and financial challenges in the housing finance sector, underscoring the RBI’s commitment to ensuring financial stability and protecting stakeholders.
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