IndusInd Bank tanks over 12% after clarification on whistleblower allegations

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Shares of IndusInd Bank tumbled over 12% on Monday after the lender said it disbursed 84,000 loans without customer consent in May owing to a “technical glitch”.

At 11:53am, the scrip was trading at 1068.50 apiece, down 10.12% on the BSE, while the benchmark Sensex stood at 60,055.60, down 12.02 points or 0.02%.

“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 provision against his portfolio. The Standard Operating Procedure has since been revised to make biometric authorization compulsory,” the lender said in a regulatory filing.

“82% of the BFIL (Bharat Financial Inclusion Limited) serviced customers are in rural and deep rural India where the access to banking services is limited. This issue further got aggravated owing to operational issues arising out of the Covid-19 pandemic including lockdown, containment zones, and restrictions at the village/panchayat level, and necessitated disbursement of some loans in cash,” it added.

Terming whistleblower allegations on loan evergreening as “grossly inaccurate and baseless”, IndusInd Bank on November 6 admitted to have disbursed 84,000 loans without customer consent in May owing to a “technical glitch”.

“The Bank strongly denies the allegations of “evergreening”. All the loans originated and managed by BFIL, including during the Covid period which saw the first and second waves ravaging the countryside, are fully compliant with the regulatory guidelines,” the bank said.

Lending without the consent was reported by the field staff in two days, and the glitch was also rectified expeditiously, the private sector lender said in a clarification.

On Friday, there was a media report about anonymous whistleblowers writing to the bank management and the RBI about BFIL, the microlending-focused subsidiary of the bank, allegedly resorting to evergreening of loans, wherein existing borrowers unable to pay dues were given new loans to present the books as clean.