Should term recent happenings at IndusInd Bank as an error, not a scam. Will not apply for any IPOs in the Indian market for the remainder of this fiscal, says Samir Arora of Helios Capital.
The private lender in its clarification on the item titled 'Whistleblowers Raise Loan Evergreening Issue at IndusInd Arm' said that the allegations were made by certain anonymous individuals purportedly acting as whistleblowers are grossly inaccurate and baseless.
The bank has admitted that due to a technical glitch in May 2021, nearly 84,000 loans were disbursed without the customer consent getting recorded at the time of loan disbursement. This issue was highlighted by the field staff within two days and the technical glitch was rectified expeditiously. Out of the above, only 26,073 clients were active with the loan outstanding at Rs.34 crore, which is 0.12% of the September-end portfolio.
The Bank carries necessary provisions against his portfolio. The Standard Operating Procedure has since been revised to make biometric authorization compulsory. The bank said all the loan products managed by Bharat Financial Inclusion (BFIL) in the capacity of a Business Correspondent, are approved by IndusInd Bank and are fully compliant with extant regulatory guidelines, issued from time to time.
The processes followed by BFIL pass through an audit, inspection, and risk and compliance checks. The NPA recognition process is fully automated in accordance with the regulatory norms that are applicable to the Bank. It added, "BFIL has an executive-level Risk Management Committee which meets every month.
This committee was put in place immediately after the merger. In June 2021, the Bank further strengthened the Governance framework through a Board approved policy, to ensure a cross-functional review of the activities of BFIL."
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