There was a media report on Friday that unknown whistleblowers have written a letter to the bank management and reserve Bank of India About this BFIL, the bank’s microlending-focused subsidiary, reportedly resorted to perpetuity of loans, in which fresh loans were given to clean up the books to existing borrowers unable to pay dues.
An official statement said, “The bank strongly denies the allegations of ‘evergreen’. All loans generated and managed by BFIL, which saw the first and second waves devastate rural areas during the COVID period , are fully compliant with regulatory guidelines.” .
It said, “Due to a technical glitch in May 2021, around 84,000 loans were booked at the time of loan disbursement without the consent of the customers.”
Bad-loan time bomb ticks in IndusInd Bank subsidiary, whistleblower warns: ET report
Whistleblowers have warned that the issue of evergreens to hide the default rate of loans issued during the pandemic could spill over from subsidiary India Financial Inclusion to the original IndusInd Bank books.
It said that due to “operational issues” caused by the second wave of the pandemic such as lockdown, restrictions at containment zones and village/panchayat level, it was necessary to pay some loans in cash.
At the end of September, 26,073 of these 84,000 customers were active with outstanding loans of Rs 34 crore, which is 0.12 per cent of the portfolio at the end of September, the bank said, adding that it makes necessary provisions against loans.
It also said that the standard operating procedure has been modified to make biometric authorization mandatory, and in October 2021, almost 100 per cent loan disbursement was in the bank accounts of customers, as in pre-COVID times. .
The bank’s statement said that during the pandemic, customers faced operational difficulties and some turned to intermittent payments, though a large portion of them showed a strong intention to repay. Exhibited.
The bank said the assistance was provided to such customers, including additional liquidity support of 20 per cent of the outstanding amount as on February 29, 2020, as applicable under ECLGS (Emergency Credit Line Guarantee Scheme), restructuring and additional loans. With a longer tenure and lower EWI (Equated Weekly Instalments) for the customers, after they have cleared their dues and with their due consent.
It may be noted that almost all the lenders have reported reversals on the micro-credit front since the start of the pandemic. Activity is concentrated in rural areas, where a lender’s field agents visit in-depth lending and collect dues in cash on a weekly basis.
With the easing of lockdown measures, all lenders are reporting improvement in collections and disbursements.
IndusInd Bank management had reported an increase in stress in the microfinance loan portfolio, with the gross non-performing asset ratio rising from 1.69 per cent in June to 3.01 per cent as of September.
The latest fall in bookkeeping stood at Rs 1,070 crore in the September quarter, while net realizations and upgrades stood at Rs 460 crore.
According to media reports on Friday, communication from whistleblowers to the bank’s chief executive officer Sumant Kathpalia, independent directors and RBI officials took place between October 17 and October 24. Additionally, there was an “outsider” who wrote to the RBI in October. 14, it said.
The report highlighted that a month before the October 14 complaint, BFIL’s non-executive chairman MR Rao had stepped down and in his resignation letter addressed the RBI’s concerns over loans given without the consent of customers. was also marked, calling it a deliberate act to shore up repayment. rates.