in multiple emails reserve Bank of India (RBI) and the IndusInd board in October, a whistleblower group of BFIL executives alleged that the bank had inflated loans, inflated revenue and reported non-performing assets. The emails followed similar allegations a month after BFIL’s former vice-president MR Rao, who in his resignation letter said that loans disbursed without the consent of the customer did not amount to “process defaults” but “to shore up repayment”. a deliberate attempt of”. ET had on Friday reported the whistleblower group’s letter and comments on Rao’s separation.
Responding to the whistleblowers’ allegations, a statement issued by the bank on Saturday said, “…the technical snag was rectified expeditiously. Out of the above, only 26,073 customers were active with outstanding loans of Rs 34 crore, which is 0.12% of the portfolio at the end of September. The bank makes necessary provisions for this portfolio. The Standard Operating Procedure (SOP) has been revised to make biometric authorization mandatory.
Strongly refuting the allegations of ‘ever greening’, IndusInd’s statement said, “All loans generated and managed by BFIL, which saw the first and second waves ravaging rural areas during the COVID period, are completely are in line with regulatory guidelines… During the pandemic, customers faced operational difficulties and some made intermittent payments, though a large portion of them demonstrated a strong intent to repay on multiple occasions. Based on this, the Bank has taken a multi-pronged approach based on customer requirement. (sic)”
The whistleblower group has blamed BFIL CEO Salabh Saxena and CFO Ashish Damani for alleged provision of loans worth thousands of crores. Neither of them responded to ET’s query on whistleblower email. According to a media report, both Saxena and Damani may soon leave BFIL and join a microfinance institution, Spandana Sphoorti.
However, this could not be independently confirmed. According to an IndusInd release, the loans follow a weekly repayment model and customers have to make payments week after week. “.. If any default occurs, the same is recorded as missed installments. In view of the weekly repayment model, the concept of evergreen is not possible,” the statement said. “The level of non-performing assets reported by BHIL is significantly lower as compared to other MFIs. Therefore, we would like to know more, given that many lenders have seen a drop in collection efficiency during the pandemic. wish to nominate.