Bandhan Bank's Clarification Aids Share Recovery After Forensic Audit Concerns

Bandhan Bank's shares rebounded following clarification that the ongoing audit of its books isn't initiated by the Reserve Bank of India (RBI). The audit's genesis lies in the government's commitment to compensate lenders for losses incurred from emergency loans extended during the pandemic in the financial year ending March 2021.

Bandhan Bank, headquartered in Kolkata, reported losses of Rs 2,600 crore from loans disbursed under the Emergency Credit Line Guarantee Scheme (ECLGS). It has received Rs 917 crore of the claimed losses and applied for an additional Rs 1,290 crore as a second tranche of compensation. However, any compensation exceeding Rs 1,000 crore undergoes an audit process.

There were concerns that this process might involve an RBI-conducted forensic audit, implying suspected irregularities by the regulator, which led to an 8 per cent drop in the stock on Monday (8 January). Yet, the company clarified today (9 January) that the audit will be conducted by the Credit Guarantee Fund of Micro Units (CGFMU).

After this clarification, Bandhan Bank's shares surged over one and a half percent as investors felt relieved that the RBI wasn't part of the audit process. "The Bank provided this clarification as a part of its cautious approach and consistent with the governance practices it upholds," the statement read.