NCLT Admits Plea To Initiate Insolvency Proceedings Against AVIOM

About three weeks after the Reserve Bank of India (RBI) filed a plea to initiate corporate insolvency resolution proceedings (CIRP) against Delhi NCR-based NBFC AVIOM India Housing Finance, the National Corporate Law Tribunal (NCLT) has admitted the plea.

A bench comprising judicial member Mahendra Khandelwal and technical member Dr Sanjeev Ranjan passed the order admitting the bankruptcy proceedings today. 

“The Hon’ble NCLT vide order dated 20 February 2025, has admitted the application for commencement of corporate insolvency resolution process of AVIOM India Housing Finance Private Limited and has appointed Mr. Ram Kumar as the Administrator as per Rule 5 (a) (iii) of FSP Insolvency Rules,” AVIOM said on its website. 

The central bank, on January 27, superseded the board of AVIOM under Section 45-IE(1) of the Reserve Bank of India Act, 1934, which gives the RBI the power to supersede the board of directors of an NBFC for a period of five years. 

In a statement, the RBI said that it undertook the step “owing to governance concerns and defaults in meeting various payment obligations”. 

Superseding the board of AVIOM, the RBI appointed ex-chief general manager, Punjab National Bank as its administrator on January 27. Subsequently, it moved an insolvency plea at the New Delhi Bench of the NCLT on January 30 under the financial service providers (FSP) Insolvency Rules, 2019, which led to an interim moratorium that restricts legal proceedings, asset transfers, and recovery actions against the company. 

The issue stems from a fraud within the company, about which it informed the BSE on November 22, 2024. 

In a letter to its lenders back in November, the NBFC said that the National Housing Bank (NHB) had appointed an independent third-party forensic auditor to audit its affairs following a “regular on-site supervisory inspection that resulted in observations, including that the statement of accounts of mutual fund(s) appear to be managed”.

On December 6, the NBFC said that it was in the process of determining the exact extent of the fraud and its impact on its financial statements. 

The exact fraud amount is yet to be publicly announced. Due to the fraud, the company began facing liquidity issues and was expecting a delay in the payment of interest. The fraud disclosure led to rating agencies ICRA, CRISIL and India Ratings and Research downgrading the NBFC from BBB+ to D. 

Founded in 2016, AVIOM provides housing loans to women from predominantly semi-urban and rural regions who do not have any formal income documentation. Its lenders and partners include HDFC Bank, IDFC Bank, Kotak Mahindra Bank, and Northern Arc. Its international lenders include US International Development Finance Corporation, BlueOrchid, Triple Jump, among others.