IndusInd faces Rs 13.5cr hit by microfin loan issue
“The bank, on a conservative basis, has a contingent provision of Rs 3,328 crore outside the provision coverage ratio, including Rs 368 crore towards the standard microfinance portfolio, as of December 31, 2021. In addition, the bank will make an additional provision of Rs 13.5 crores in Q4FY22 based on the findings of the review,” IndusInd Bank said in a statement to the exchanges.
In November 2021, a group of senior officials from IndusInd Bank subsidiary Bharat Financial alerted the Reserve Bank of India (RBI) and the bank’s board of accounting standards breaches. IndusInd Bank had acquired Bharat Financial (formerly SKS Microfinance) in a stock transaction in 2019. The bank’s shares had fallen over fears that the practice of extending loans to existing borrowers was tantamount to rollover.
“In one of the products, introduced to provide liquidity support to clients during the Covid-19 pandemic, the sequencing of incomings and outgoings could not be established as both occurred on the same day. This product was discontinued in September 2021 and the bank has, on a prudent basis, fully provisioned the exposure of this product as of December 31, 2021,” the bank said.