Mumbai: The (NHB) has appointed ASA & Associates LLP to conduct a forensic audit of , formally confirming a development first reported by The Economic Times earlier this month amid allegations of , manipulation of repayment records and possible diversion of funds at the Rajasthan-based affordable housing lender.



Also Read:




In a stock exchange filing on October 22, SRG Housing Finance said it had received a communication from NHB informing it of the appointment of ASA & Associates LLP, Chartered Accountants, as the forensic auditor. The development comes nearly three weeks after the company disputed an ET report on the proposed forensic investigation, saying it had not received any communication from the housing finance regulator.




ET had reported on October 5 that NHB had initiated the process of appointing a forensic auditor to investigate suspected irregularities at the Udaipur-headquartered lender. The regulator had issued a request for proposal on October 3, seeking an independent examination of loan accounts, customer records, disbursements, repayment entries and possible misuse of funds.




In its October 5 clarification to the stock exchanges, SRG Housing Finance said it had not received any communication or notification from NHB regarding a forensic audit and maintained that ET's report did not accurately reflect the company's position at that time.




The latest disclosure marks a significant development in the regulatory scrutiny of the housing finance company, whose loan book had come under examination following allegations of irregular lending practices.




ET was the first to report on September 10 that NHB had red-flagged its exposure to SRG Housing Finance after an earlier inquiry identified suspected fictitious loan accounts worth Rs 300-400 crore, equivalent to roughly a third of the lender's reported loan book.




According to people familiar with the earlier findings, several loans had allegedly been shown as disbursed even though the existence of the underlying borrowers could not be established. The inquiry also indicated possible evergreening of loans, manipulation of non-performing asset classifications and routing of funds linked to certain suspect accounts to promoter-associated entities.




The regulator had classified its exposure as a Red Flagged Account (RFA) and reported the status on the Reserve Bank of India's Central Repository of Information on Large Credits (CRILC), the people had said. An RFA classification indicates suspected irregularities requiring further investigation and does not, by itself, amount to a declaration of fraud.




The forensic audit will examine whether fictitious or unsupported loan accounts were created, whether repayment records were altered and whether the same loans or underlying securities were offered to multiple lenders.




According to the scope of work outlined in NHB's earlier tender, the auditor will verify borrower identities, loan sanction documents, disbursement trails, end-use of funds and repayment records. The exercise will also include an examination of the company's loan origination and accounting systems to identify possible alteration or backdating of loan accounts, EMI collections and asset classifications.




The auditor will additionally examine whether stressed loans were represented as standard assets and whether fictitious loan accounts were offered as security for NHB refinance. An independent assessment of non-performing assets as of March 31, 2025, and March 31, 2026, will be undertaken to establish the financial impact of any irregularities identified.




SRG Housing Finance had previously rejected allegations of fictitious lending and fund diversion. In its September 10 exchange filing, the company said there had been no creation or maintenance of fictitious accounts and no diversion of funds for any purpose.




On October 3, the lender also informed stock exchanges that it had no overdue repayment obligations to lenders and maintained adequate liquidity. It said it was evaluating a potential capital infusion to strengthen its balance sheet.




The company reported assets under management of Rs 1,076 crore as of June 2026, an increase of 35% year on year. Its promoter group held 59.02% at June-end, with managing director Vinod Kumar Jain among its principal shareholders.




Rating agency Acuité Ratings had placed SRG Housing Finance's ratings under watch with developing implications in September, citing the reported NHB investigation and uncertainty over the potential impact on its financial profile, liquidity and asset quality.




The forensic audit is expected to establish the extent, if any, of irregularities in the company's loan portfolio and their possible financial implications. Its findings could determine the next course of supervisory action by NHB.