A subsidiary of Indusind Bank disbursed nearly 84,000 loans without customer consent in May 2021 due to a technical glitch, said the private lender on Saturday.
An independent review will fix process lapse or accounting failure at Bharat Financial Inclusion Ltd (BFIL), the bank’s microfinance arm. Customer consent was not recorded at the time of loan disbursement but the bank’s field staff highlighted the miss within two days and the glitch was rectified immediately, Indusind Bank said in a statement.
Of the total such loans, only 26,073 clients were active with the loan outstanding at Rs.34 crore, which is 0.12 per cent of the September-end portfolio. The bank said it would carries the necessary provision against this portfolio and take corrective action as appropriate if there is any need, adding it and BFIL have a strong risk management and control framework.
The Bank said it follows a conservative provisioning approach and there is no change in the credit cost estimates, including that in its micro-finance business.
It said 82 per cent of the BFIL serviced customers are in rural and deep rural India where the access to banking services is limited. This glitch was aggravated owing to operational issues arising out of the Covid-19 pandemic, including lockdowns and containment zones.
All loans disbursed by BFIL are through biometric authorisation of customers (except when the glitch happened). In October 2021, nearly 100 per cent of the loan disbursements were in the bank accounts of the customers, as in pre-Covid time.