Hinduja-owned IndusInd Bank, under attack from whistleblowers for evergreening of loans at the bank's wholly-owned microfinance subsidiary, has seen two key people -- Shalabh Saxena, Managing Director and Chief Executive Officer and Ashish Damani, Executive Director and Chief Financial Officer at the subsidiary, trying to make a quiet exit from the microfinance unit.
The bank has said that "certain transactions relating to microfinance subsidiary Bharat Financial Inclusion Limited (BFIL ) are subject matter of an ongoing review and the continued employment of Saxena and Damani at BFIL is critical to the closure of such process."
"Accordingly, they cannot be relieved from the services of BFIL, until completion of the said review," said the bank. In fact, the bank has sought an independent review to see if there is any process lapse or accounting failure at BFIL. The banking regulator, the Reserve Bank of India (RBI), too, is monitoring the developments at the bank.
Both the professionals are currently employed with the bank’s wholly-owned subsidiary, BFIL, which is facing serious allegations of evergreening of loans by whistleblowers. While strongly denying the allegations, the bank had earlier said that "all the loan products managed by BFIL in the capacity of a Business Correspondent, are approved by the bank and are fully compliant with extant regulatory guidelines".
The bank, through BFIL, provides microloans to women in rural India for income-generating activities under the joint liability group.
The bank has issued a strongly worded statement today post the announcement by Spandana Sphoorty Financial Limited (SSFL) on the purported appointment of Saxena as MD & CEO and Damani as Chief Financial Officer of SSFL.
"Neither, Saxena nor Damani have tendered their resignation from the services of BFIL. As per the terms of their employment, once the resignation is tendered, it is subject to acceptance by the board. Upon acceptance by the Board, a specified notice period is also required to be served. However, as neither of them has tendered their resignations to BFIL, such due process has not been initiated," said the bank.
Moreover, as per their contractual terms of employment, the bank has said that Saxena and Damani are also prohibited from accepting employment at a competitor of BFIL (such as SSFL) unless approved in writing by the Board of BFIL.
The whistleblowers' allegations are serious. In fact, the bank had earlier issued another clarification that due to a technical glitch in May 2021, nearly 84,000 loans were disbursed without the customer's 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 per cent of the September-end portfolio," said the bank.
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