Forensic Audit Launched on Bandhan Bank Loans Worth ₹23,000 Crore

EY is currently conducting a forensic audit on a segment of Bandhan Bank‘s loan portfolio, specifically the loans covered by government guarantees amounting to over ₹23,000 crore. The National Credit Guarantee Trustee Company (NCGTC) has initiated this audit, as revealed by sources familiar with the matter.

The audit is an in-depth examination that will encompass two key government credit guarantee schemes – the Credit Guarantee Fund for Micro Units (CGFMU) and the Emergency Credit Line Guarantee Scheme (ECLGS). This proactive step is commonly taken when there are concerns regarding the utilization of funds by an entity.

In response to a tender floated by the NCGTC in November, various bidders have expressed interest in this audit. Initially, the identity of the lender was not disclosed; however, upon request from bidders, Bandhan Bank’s name was revealed.

Ratan Kumar Kesh, the Executive Director of Bandhan Bank, provided insights during an analyst call, stating that the bank availed CGFMU coverage in the fiscal year 2020-21 amid the challenges posed by the Covid pandemic. Loans worth ₹20,800 crore were covered under CGFMU, with an additional disbursement of ₹1,950 crore under ECLGS.

Kesh mentioned that a substantial portion of the loans, around ₹19,000 crore, had already been repaid by borrowers. The remaining amount, approximately ₹3,600 crore, currently constitutes the stress book in the bank’s portfolio, against which provisions of over 89% have been made.

The scope of the forensic audit includes a detailed examination to detect any fictitious customers, assess the presence of window dressing or evergreening of loans, validate the eligibility of portfolios for government schemes, and track the sources of overdue repayments for loans within the schemes.