bandhan bank share clarified that the audit was started by NCGTC, not the banking regulator RBI, in response to reports regarding the audit’s findings regarding the perpetuity of debts.
On February 12, the private lender bandhan bank share declared that, in spite of the National Credit Guarantee Trust Company’s (NCGTC) ongoing audit, the bank is confident that its claims regarding the resolution of its issues with the Credit Guarantee Fund for Micro, Units CGFMU will be handled appropriately.
Over Rs. 1,950 crore was disbursed under the Emergency Credit Line Guarantee Scheme (ECLGS) and a portfolio worth Rs. 20,800 crore was distributed under the CGFMU scheme during the 2020–21 fiscal year. The lender with its headquarters in Kolkata declared that it is working with the agency on the audit in full.
Any bank may make a claim under the CGFMU insurance up to a maximum eligible amount of 15% of the total insurance amount. As of December 2022, the bank has received and claimed Rs. 917 crore from NCGTC. Consequently, the bank has submitted an additional claim for For the second quarter (Q2FY24), Rs. 1,296 crore.
In response to certain media reports about the NCGTC audit on the “perpetuity of loans,” bandhan bank share made it clear that the agency responsible for implementing credit guarantee schemes, NCGTC, launched the audit, not the Reserve Bank of India (RBI), which oversees banking regulations.
Previous media reports claimed that NCGTC, the organization in charge of putting credit guarantee plans into place, had started a forensic audit of bandhan bank share Rs. 20,800 crore portfolio of microloans due to worries about the loans’ perpetuity.
bandhan bank share clarified in response to these reports that the total amount claimed thus far is significantly less than the maximum amount eligible. The bank declared It should be mentioned that the customers have reimbursed about 85% of the total amount that was distributed.
Bandhan had notified stock exchanges that the bank had provisioned about 88% of the remaining non-performing portfolio. Furthermore, the process of recovering money from these accounts is in progress, and according to the statement, underlying customers have already contributed more than 20% of the Rs. 917 crore claimed amount.
According to Bandhan, NCGTC used an independent agency to carry out an initial sample audit following the second claim. According to the bank, NCGTC made some remarks based on the sample audit, and the bank clarified these remarks. NCGTC has since made the decision to carry out a thorough audit of the claims.
bandhan bank share dropped by over 7% to Rs. 199 per share on February 12. A month ago, worries about asset quality and the dominance of the NCGTC audit caused the share price to drop by 12%, while the benchmark Sensex saw a 1.8% decline.
The need to take this action is not new for bandhan bank share.
Please elaborate on the NCGTC audit. The bank provided a similar explanation last month, claiming that NCGTC was not conducting a regulator-conducted audit, but rather that it had chosen to undertake a thorough examination of the CGFMU portfolio for the 2020–21 fiscal year.
A document released by the National Credit Guarantee Trustee (NCGTC) discloses that the trust has requested a forensic audit of the Rs. 23,300 crore loan given to bandhan bank share.
Profit has a copy of this document, and based on its review, the bank has registration and guarantees for these examined portfolios, which are a part of the Emergency Credit Line Guarantee Scheme (ECLGS) and the Credit Guarantee Scheme for Micro Units (CGFMU).
These two plans were started at the same time as the COVID-19 pandemic. The government supplied guarantees because their goals were to minimize bank losses and give loans to small borrowers in need.
Exchanges were notified on January 9th by Bandhan Bank that NCGTC is carrying out a “detailed” audit of the CGFMU portfolio for FY21. The bank further stated in this exchange filing that it is only an audit of the CGFMU claims the bank made in relation to the portfolio, and that the regulator did not start this audit.
The bank stressed that the detailed audit relates to the second installment of CGFMU claims in the exchange filing. The audit will concentrate on the ECLGS and CGFMU portfolios, per the NCGTC document. According to a person with knowledge of the situation who spoke to NDTV Profit under the condition of anonymity, NCGTC had started an initial audit at the end of 2023, but it decided to begin a forensic audit because it was concerned about the situation.
Documents from NCGTC state that FY21 is the review period for the CGFMU portfolio. Over this time frame, loans totaling about 4,000 crore rupees from roughly 5.5 lakh borrowers have been declared non-performing assets (NPAs).
The review period for the ECLGS portfolio runs from May 2020 to June 30, 2021. The document states that about 7.55 lakh borrowers with debts totaling 955 crore rupees have been labeled as non-performing assets (NPAs) in this location.
