The Hindu Business Line : SBI Home Finance served show-cause notice by NHB

SBI Home Finance Ltd has been served a show-cause notice by National Housing Bank (NHB), New Delhi, threatening to cancel the registration of the company in the light of the erosion in its net worth and the losses incurred over the past several years.

In a notification to the BSE, SBI Home Finance Ltd said that the company would be responding to the show cause notice appropriately.

The notice, dated November 10, asks SBI Home Finance to explain why the certificate of registration issued to the company should not be cancelled under sub-section (6) of Section 29A of National Housing Bank Act, 1987 in light of disclosure in the Company's Annual Report for the year ended March 31, 2004 that its net worth stands totally eroded and the total liability exceeds its total assets.

The Net Owned Fund of the company was Rs 230.35 crore (negative) and housing loan portfolio was nil as on March 31, 2004.

The company's branches have been closed down and all the employees have been voluntarily separated.

The company has been incurring losses for past several years, mainly on account of high NPAs. The accumulated losses increased from Rs 82.35 crore as on March 31, 2001 to Rs 248.11 crore as on March 31, 2004.