NCLT admits Aviom India Housing to insolvency resolution on RBI’s plea

The National Company Law Tribunal (NCLT) on Thursday admitted embattled Non-Banking Financial Company (NBFC), Aviom India Housing Private Limited, to the Corporate Insolvency Resolution Process (CIRP) on a plea filed by the Reserve Bank of India (RBI). .A Bench of Judicial Member Mahendra Khandelwal and Technical Member Dr. Sanjeev Ranjan passed the order.“The petition is admitted," the NCLT said in court..A detailed copy of the order is awaited. .Aviom India Housing Finance Pvt. Ltd., established in 2016, is a housing finance company headquartered in New Delhi, India. The company focuses on providing affordable housing loans to low-income households in semi-urban areas, offering products such as home improvement, renovation, and sanitation loans.As of March 31, 2024, Aviom reported annual revenue of approximately $50.4 million, with a workforce of 284 employees. The company has secured a total funding of $51.6 million across eight rounds, with investors including Nuveen, Sabre Partners India, and Gojo & CompanyIn late 2024, fraudulent transactions amounting to approximately ₹95 crore was uncovered in Aviom India Housing Finance Pvt. Ltd. These financial irregularities significantly disrupted the company's cash flow, leading to potential delays in meeting its repayment obligations to lenders..On January 30, the RBI filed an application before the NCLT in New Delhi to initiate the CIRP under Section 227 and clause (zk) of sub-section (2) of Section 239 of the Insolvency and Bankruptcy Code (IBC) and the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (FSP Insolvency Rules).During the course of the hearing on February 14, Senior Advocate Arun Kathpalia, who appeared for RBI, contended that the central bank suspects funds to the tune of ₹1000 crore had gone missing from Aviom. Earlier in January, the RBI had superseded Aviom India's board of directors and filed a plea to initiate insolvency proceedings to protect stakeholders' interests.The action was taken under Section 45-IE(1) of the Reserve Bank of India Act, 1934 following a recommendation from the National Housing Bank (NHB).Ram Kumar, former Chief General Manager of Punjab National Bank, was appointed as the Administrator under Section 45-IE(2) of the RBI Act..RBI has the authority to initiate insolvency proceedings against Non-Banking Financial Companies (NBFCs) under IBC in accordance with Section 227 of the IBC. This section empowers the Central government, in consultation with financial regulators such as the RBI, to notify specific categories of financial service providers (FSPs) that can be subjected to resolution under the IBC. Additionally, the FSP Insolvency Rules provide a framework for the resolution of distressed NBFCs with an asset size of ₹500 crore or more. As the sectoral regulator, the RBI can supersede the board of an NBFC, appoint an administrator and file an application before the National Company Law Tribunal (NCLT) to initiate CIRP. This mechanism ensures timely intervention in cases of financial instability or governance failures, protecting creditors, depositors and the overall financial system..RBI was represented by Senior Advocate Arun Kathpalia with Advocate Navneet R.