Bandhan Bank is currently undergoing an audit of its 51 lakh microfinance borrower accounts. The audit is being conducted by E&Y as part of the bank’s mandate to examine the Rs 22,750 crore worth of loans against which the bank sought insurance claims from the government.
Bandhan Bank’s managing director, Chandra Shekhar Ghosh, has denied any irregularities in these accounts and the practice of evergreening loans. He mentioned that the audit is taking time to resolve due to the large number of borrower accounts involved, but stakeholders should not be worried about it.
Loans and Government Guarantee Schemes
The loans being audited are backed by two separate government guarantee schemes. Bandhan Bank has taken insurance cover under the Credit Guarantee Fund for Micro Units against a total of Rs 20,800 crore of microfinance loans disbursed in FY21. Additionally, the bank disbursed over Rs 1,950 crore under the Emergency Credit Line Guarantee Scheme during the same year.
Loan Repayment and Insurance Claims
Chandra Shekhar Ghosh clarified that Bandhan Bank follows a business model where fresh loans are offered only after full repayment of existing loans. He mentioned that emergency loans were provided on top of existing loans during the COVID-19 pandemic to help borrowers overcome the crisis under the Emergency Credit Line Guarantee Scheme of the government.
The bank continues to recover dues from the portion of loans against which insurance claims have been made. This recovery will be adjusted when the government pays the next phase of insurance claims. Bandhan Bank has already received an amount of Rs 917 crore from the National Credit Guarantee Trustee Company in December 2022. An additional claim of Rs 1,296 crore has been made in the second quarter of FY24, but the payment is subject to the result of the audit.
Conclusion
In conclusion, Bandhan Bank is currently undergoing an audit of its 51 lakh microfinance borrower accounts. The audit is being conducted by E&Y as part of the bank’s mandate to examine the loans against which insurance claims were sought from the government. Bandhan Bank’s managing director has denied any irregularities in the accounts and mentioned that the audit is taking time due to the large number of borrower accounts involved. The loans are backed by government guarantee schemes, and the bank continues to recover dues from the loans against which insurance claims have been made.
Uttar Dinajpur