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PNB Housing Finance has reported an additional INR 933 crore in bad loans after a review by the National Housing Bank. The divergence relates to FY23 and is linked to loan restructuring that did not fully meet regulatory norms. This has increased gross NPAs to over INR 3,200 crore. The issue involves two project loans where interest rates were reduced. One loan has been repaid and the other remains standard. The company stated that the disclosure has no immediate financial impact.
PNB Housing Finance has disclosed a divergence in its loan classification after the National Housing Bank (NHB) identified additional non-performing assets worth INR 933.58 crore during its supervisory review of the company's FY23 books. Advertisement
The company had earlier reported gross non-performing assets (NPAs) of INR 2,271.36 crore. Following the NHB's observations, the total gross NPAs have been revised upward to INR 3,204.94 crore. The divergence was primarily related to certain loan restructuring actions that were not fully aligned with prescribed regulatory norms.
The issue was linked to two project finance loan accounts where the company had reduced interest rates for competitive and commercial considerations. These accounts were classified as standard at the time, but the regulator later viewed the restructuring as non-compliant with asset classification guidelines, leading to their reclassification.
One of the identified accounts, with an exposure of INR 598.39 crore, has since been fully repaid. The second account has seen a significant reduction in outstanding amount to around INR 67.39 crore and continues to remain a standard and regular account as per the company's current assessment.
PNB Housing Finance clarified that the divergence is largely technical in nature and does not have any immediate impact on its profitability, cash flows, or ongoing operations. The company also indicated that the disclosure is being made in line with regulatory requirements and transparency norms, and the details will be reflected in its financial statements.
The development comes at a time when housing finance companies are under closer regulatory scrutiny, especially in areas such as loan restructuring and asset classification. Regulators have been focusing on ensuring that any changes in loan terms are in strict compliance with prudential guidelines to avoid misreporting of asset quality.
Over the past few years, PNB Housing Finance has been working on improving its asset quality by reducing exposure to developer loans and focusing more on retail lending. Its gross NPA levels had seen a decline from earlier highs due to recoveries and resolution of stressed accounts. This divergence, however, reflects a regulatory adjustment rather than a fresh deterioration in its loan book.
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