SRG Housing Finance shares plunged 20% on Thursday, extending a sharp selloff after reports raised concerns over allegedly fictitious loan accounts at the affordable housing lender. The company, however, has strongly denied the allegations and said no adverse regulatory finding has been communicated to it.
The stock fell to an intraday and weekly low of Rs 195, down Rs 54.70, or 21.91%, from the previous level of Rs 249.70. The chart shows the stock had traded near Rs 250 earlier in the week before the sharp fall on Thursday.
The selloff followed a report that the National Housing Bank (NHB) had raised concerns over suspected fictitious loan accounts worth around Rs 300-400 crore at SRG Housing Finance. The reported amount would represent roughly a third of the lender's loan book, based on its latest assets under management.
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According to the report, the alleged irregularities include loans shown as disbursed where underlying customers could not be established, as well as suspected evergreening and manipulation of non-performing assets.
However, in an exchange filing dated September 10, SRG Housing Finance rejected the allegations. The company said it has not received any communication from NHB's Refinance Department regarding red flags on any loan accounts and described the reports as distorted and misleading.
SRG Housing Finance also categorically denied creating or maintaining fictitious accounts or diverting funds for any purpose.
The company acknowledged that an NHB inspection is currently underway, but said such periodic regulatory inspections are part of the normal supervisory framework for housing finance companies and should not, by themselves, be interpreted as an adverse finding.
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