**Summary:**
This document summarizes the Indian government's response to a question in Lok Sabha regarding fraud by housing finance companies (HFCs). As of August 4, 2025, 91 HFCs are operating in India, regulated by the Reserve Bank of India (RBI) under the Reserve Bank of India Act, 1934, and the National Housing Bank Act, 1987. The National Housing Bank (NHB) exercises supervisory powers, including onsite inspections and information collection. The RBI takes action against defaulting HFCs, including penalties, warnings, prohibitory orders, and cancellation of the Certificate of Registration (CoR).
One instance of fraud involving manipulation of accounts and misstatement of financial statements within an HFC was reported to the NHB. The NHB conducted a Snap Audit and Forensic Audit and reported the findings to the RBI. Subsequently, the RBI superseded the board of directors, appointed an Administrator, and filed a petition for insolvency resolution process before the National Company Law Tribunal (NCLT), which is currently under adjudication. The HFC in question is permitted to recover loan installments and pay liabilities and expenses.
Key Entities Referenced
Ministry of Finance: A department of the Government of India.
Lok Sabha: The lower house of the Parliament of India, where the question was raised.
Shri Arun Kumar Sagar: Member of Parliament who raised the unstarred question.
Shri Pankaj Chaudhary: Minister of State in the Ministry of Finance, who provided the answer.
Reserve Bank of India (RBI): The central bank of India, responsible for regulating Housing Finance Companies (HFCs).
National Housing Bank (NHB): A regulatory body that exercises supervisory powers over Housing Finance Companies (HFCs).
Reserve Bank of India Act, 1934: An act of Parliament in India that created the Reserve Bank of India.
National Housing Bank Act, 1987: An act of Parliament in India establishing the National Housing Bank.
National Company Law Tribunal (NCLT): A quasi-judicial body in India that adjudicates issues relating to Indian companies.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO. 2393
ANSWERED ON MONDAY, 4th AUGUST, 2025/ 13 SRAVANA 1947 (SAKA)
FRAUD BY HOUSING FINANCE COMPANIES
†2393. SHRI ARUN KUMAR SAGAR:
Will the Minister of FINANCE be pleased to state:
(a) whether a number of housing finance companies with questionable credibility are operating
and defrauding people in the country;
(b) if so, the details thereof;
(c) whether the Government has conducted any inquiry in this regard; and
(d) if so, the action taken by the Government against such companies?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (d): Housing Finance Companies (HFCs) are required to obtain Certificate of Registration
(CoR) from the Reserve Bank of India (RBI) before commencing/ carrying on the business of
housing finance in India. Presently, 91 HFCs are functioning in the country which are regulated
by RBI in terms of powers vested under the Reserve Bank of India Act, 1934 and the National
Housing Bank Act, 1987. However, NHB exercises supervisory powers over HFCs which
include onsite inspections of HFCs as well as collecting returns and various information from
HFCs.
Action against defaulting HFCs is taken by RBI from time to time and includes levy of penalties,
issuance of warnings, prohibitory orders, cancellation of CoR, etc.As informed by NHB, a fraud was reported in one HFC alleging manipulation of Books of
Accounts and mis-statement of financial statements of the company with involvement of staff.
NHB conducted a Snap Audit and a Forensic Audit of the HFC and reported to RBI.
Subsequently, RBI superseded the board of directors of the HFC and appointed Administrator.
Thereafter, RBI filed petition for insolvency resolution process before the Hon’ble National
Company Law Tribunal (NCLT) against the HFC which is under adjudication. However, the
HFC has not been prevented from recovering their loans/ instalments of loans from the
borrowers and payment of liabilities and expenses.
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