Shares of IndusInd Bank slumped 10 per cent to Rs 1,069.90 on the BSE in Monday’s opening trade despite the bank management strongly refuting allegations around the evergreening of loans, citing media reports as “inaccurate and baseless”.
With today’s decline, the stock has slipped nearly 14 per cent from its 52-week high of Rs 1,242 on October 28, 2021. In comparison, the S&P BSE Sensex was down 0.22 per cent at 59,935 points at 09:30 am.
According to The Economic Times report, whistleblowers, several people, including a group of senior employees of the IndusInd Bank arm, Bharat Financial Inclusion (BFIL), have alerted the Reserve Bank of India (RBI) and the board of the private sector lender about lapses in governance and accounting norms to allegedly ‘evergreen’ loans running into thousands of crore since the outbreak of Covid-19.
For clarification purpose, IndusInd Bank, in a press release, said that the allegations made by certain anonymous individuals purportedly acting as whistleblowers, as published in the Mumbai edition of The Economic Times on November 5, 2021 titled as “Whistleblowers Raise Loan Evergreening Issue at IndusInd Arm” are grossly inaccurate and baseless.
“All the loan products managed by 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 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,” IndusInd Bank said. CLICK HERE FOR FULL RELEASEThe management alluded that the governance structure and risk framework remain strong and have been strengthened over the years with strict supervision. The RBI’s review process is underway, while it has also suggested an external audit to provide further comfort. The business environment continues to improve, having surpassed pre-COVID levels in Oct’21, while the credit cost guidance is maintained, Motilal Oswal Securities said in a company update.
The stock could witness some pressure due to adverse media articles and asset quality stress reported by some other MFI lenders. Nevertheless, we expect the impact to be controlled, the brokerage firm said.
