Audit of Rs 22.7K cr microloans due to large claim amount: Bandhan CEO

Bandhan Bank has clarified the need for a forensic audit of Rs 22,750 crore of microloans, saying the step has been taken due to the large claim amount. 

The Kolkata-based lender had insured a portfolio of Rs 20,800 crore under the Credit Guarantee Fund for Micro Units (CGFMU) scheme and disbursed over Rs 1,950 crore under the Emergency Credit Line Guarantee Scheme (ECLGS) in 2020-21.

In December 2022, the bank claimed and received an amount of Rs 917 crore from the National Credit Guarantee Trustee Company (NCGTC). An additional claim of Rs 1,296 crore was made in the second quarter of FY24.

Following the second claim, NCGTC conducted an initial sample audit through an independent agency and raised some queries. After Bandhan Bank provided clarifications, NCGTC decided to conduct a detailed audit of the claims.

"An audit is needed because the first claim was Rs 917 crore and the next was Rs 1,296 crore. Since the total claim is over Rs 2,000 crore, there is a need for a detailed audit. This is also for better compliance,” Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank told Business Standard. NCGTC appointed EY to conduct the audit.

The maximum eligible amount a bank can claim under the CGFMU insurance is 15 per cent of the total insured amount. The bank stated that 84 per cent of the portfolio, or around Rs 19,000 crore, has been repaid by customers, and the balance is nearly Rs 3,750 crore. It has made a provision of 88 per cent of this remaining amount.

Ghosh noted that there are 2.9 million customers whose accounts have become non-performing. The bank recovered Rs 214 crore from the Rs 917 crore claimed and received amount from NCGTC.

“…the bank continues its recovery process from these accounts and has already recovered more than 20 per cent of the claimed and received amount of Rs 917 Crore from the underlying customers,” the lender had informed the exchanges.

Ghosh clarified that there has been no regulatory intervention on this matter so far.

As on December 31, 2023, Bandhan Bank’s total loan portfolio was Rs 1.16 trillion, showing a year-on-year growth of 18.6 per cent. The share of the emerging entrepreneur business (EEB) group, which is essentially microloans, was 33.4 per cent, followed by housing loans at 24.5 per cent and commercial banking at 21.6 per cent. The number of active borrowers in the EEB portfolio was 13.6 million as of December 31, 2023, compared to 13 million a year ago.