InvestorQ : What is the latest on Reliance Home Finance and is it correct that the company has been consistently defaulting on its payments?
Dawn Cherian made post

What is the latest on Reliance Home Finance and is it correct that the company has been consistently defaulting on its payments?

Answer
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Dhwani Mehta answered.
8 months ago


Reliance Home Finance had problems on the asset and liability side of its balance sheet. Reliance Home Finance which is part of the Anil Ambani-led Reliance Group, had apparently granted loans worth about Rs.12,000 crore to potential indirectly linked borrowers that had weak financials and shared common features. This was brought out by a forensic audit carried out by Grant Thornton. The forensic auditor found serious anomalies in credit appraisal process of the home financier and noted that more than 80% of disbursals comprised corporate loans to a group of 47 borrowers. These borrowers actually shared a lot of common characteristics including similar registered addresses, common directors and common key management personnel.

Its exposure to corporate loans was also in clear violation of regulatory guidelines that prescribe limits for non-housing disbursement and this was again brought up by the forensic audit. The auditor had also detected instances where loans granted to the group of 47 borrowers eventually found their way back to Anil Ambani group companies through onward lending; a common circuitous route adopted by many companies. Ironically, many of these corporate borrowers were incorporated recently and loans were disbursed to them within a few weeks of their incorporation. This group of 47 borrowers identified by Grant Thornton have to repay around Rs.7,900 crore to Reliance Home Finance and that could only exacerbate the problem for the company.