(Bloomberg) -- IndusInd Bank Ltd., backed by the billionaire Hinduja brothers, denied allegations that its unit was providing new loans to customers to keep their existing debt from souring, a practice known as “evergreening.”
The bad loan recognition process is fully automated in accordance with the regulatory norms, the bank said in an exchange filing Saturday. It was responding to a media report about whistleblowers disclosing lapses at Bharat Financial Inclusion Ltd., the micro-lending unit of IndusInd, to the Reserve Bank of India.
“All the loans originated and managed by BFIL, including during the Covid period which saw the first and second waves ravaging the country, are fully compliant with the regulatory guidelines,” IndusInd said.
BFIL provides tiny loans to women in rural India for income generating activities and the borrowers are required to make weekly payments. “In view of the weekly payment system, evergreening is infeasible,” the bank said.
IndusInd Bank had previously reported that a technical glitch had resulted in loans getting disbursed to customers' accounts without their consent, and that the problem was rectified within two days. The bank said it has since made biometric authorization compulsory for disbursements and initiated an independent review to ascertain any process lapse or accounting failure at BFIL.
©2021 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
