A subsidiary of Indusind Bank disbursed nearly 84,000 loans without the client’s consent in May 2021 due to a technical glitch, the private lender said on Saturday, which denied the rollover allegations.

An independent review will correct the process failure or accounting failure of Bharat Financial Inclusion Ltd (BFIL), the bank’s microfinance arm. Client consent was not recorded at the time of loan disbursement, but bank field staff identified the breach within two days and the issue was corrected immediately, Indusind Bank said in a statement. .

“The bank strongly denies the allegations of ‘evergreening’. All loans issued and managed by BFIL, including during the COVID period which saw the first and second waves ravage the countryside, are in full compliance with regulatory guidelines,” the statement said. .

“Due to a technical issue in May 2021, nearly 84,000 loans were disbursed without the client’s consent being recorded at the time of loan disbursement.”

Of the total of these loans, only 26,073 clients were active with an outstanding loan of Rs 34 crore, or 0.12% of the end-September portfolio. The bank said it would carry the necessary provision on this portfolio and take corrective action if necessary, adding that it and BFIL have a strong risk management and control framework.

The Bank said it was following a conservative provisioning approach and that there was no change in estimates of the cost of credit, including in its microfinance activities.

He said 82% of clients served by BFIL are in rural and deep rural India where access to banking services is limited. This problem has been compounded due to operational issues related to the Covid-19 pandemic, including closures and containment areas.

All loans disbursed by BFIL are made by biometric authorization from clients (except in the event of a glitch). As of October 2021, almost 100% of loan disbursements were in customer bank accounts, as in the pre-Covid era.

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