Tag: Spandana Sphoorty

IndusInd Bank board yet to decide on Shalabh Saxena, Ashish Damani’s resignation from Bharat Financial Inclusion

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The top honchos of Bharat Financial Inclusion Ltd — Shalabh Saxena and Ashish Damani — have resigned from their positions but the board has decided to defer the consideration of the decision to relieve them until an ongoing review is completed, IndusInd Bank said on Monday.

A review of disbursal of nearly 84,000 loans without customer consent due to a technical glitch at BFIL is at present going on at the microfinance company.

“Shalabh Saxena and Ashish Damani, currently employed with BFIL in the capacity of the Managing Director and CEO and the Executive Director and CFO, respectively, have tendered their resignations pursuant to e-mails addressed to the Chairman of the Board of BFIL on November 25, 2021,” the private sector lender said in a stock exchange filing on Monday.

IndusInd Bank objects to Saxena, Damani joining Spandana Sphoorty

The announcement comes after Spandana Sphoorty (SSFL) had on November 22 announced the appointment of Saxena as its new Managing Director and CEO and Damani as the President and Chief Financial Officer.

BFIL is the wholly owned microfinance subsidiary of IndusInd Bank.

Global audit firm

Both of them have offered to assist in the ongoing review of transactions related to BFIL, for which the bank has appointed an international audit firm to conduct independent review and ascertain the veracity of the anonymous complaints, the bank further said.

“The board of BFIL has deferred consideration of the decision to relieve them until the completion of the ongoing review,” IndusInd Bank said.

The lender has nominated J Sridharan as Executive Director on the Board of BFIL and appointed Srinivas Bonam to oversee the day-to-day functioning of BFIL, it further said.

“MR Rao continues to be associated as an advisor to BFIL bringing his years of experience in microfinance and scaling up BFIL,” IndusInd Bank said, adding that it has also appointed KV Rao, who is the former Chief Operating Officer and Head Member Services for 11 years at BFIL, as an advisor for strengthening the field processes.

Previously, on November 23, the bank had said that Saxena and Damani had not yet resigned from BFIL and had cited a non-compete clause in their contracts that prohibited them from accepting employment at a competitor of the microfinance company.

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IndusInd Bank clarifies on appointment of BFIL executives by SSFL, BFSI News, ET BFSI

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IndusInd Bank has clarified that Shalabh Saxena and Ashish Damani are currently employed with its wholly owned subsidiary Bharat Financial Inclusion (BFIL) as managing director & CEO, and Chief Financial Officer, respectively, countering that they have been appointed by Spandana Sphoorty Financial Ltd (SFFL). SFFL on Monday had announced the appointment of Saxena as its MD & CEO, and Damani as the President and CFO of the company.

In a clarification, IndusInd Bank said that “Shalabh Saxena and Ashish Damani are currently employed with bank’s wholly owned subsidiary, Bharat Financial Inclusion (BFFL), in the capacity of the Managing Director & Chief Executive Officer and Executive Director & Chief Financial Officer, respectively”.

“Neither, Shalabh Saxena nor Ashish Damani have tendered their resignation from the services of BFIL,” the bank said.

As per the terms of their employment, once the resignation is tendered, it is subject to acceptance by the board of directors of BFIL (board). Upon acceptance by the board, a specified notice period is also required to be served, IndusInd Bank said in a regulatory filing.

“However, as neither of them have tendered their resignations to BFIL, such due process has not been initiated,” it added.

Spandana had announced that Saxena accepted the position of Managing Director & Chief Executive Officer, and Damani as the President & Chief Financial Officer of the company, respectively.

The private sector lender also said that Saxena and Damani are prohibited from accepting employment at a competitor of BFIL (such as SSFL), unless approved in writing by the board of BFIL.

“As resignation from BFIL has not been tendered to the board by Shalabh Saxena and/or Ashish Damani, any purported acceptance by them of employment at SSFL would be in contravention of the terms of their employment with BFIL,” IndusInd Bank said.

Further, it said that they cannot be relieved from the services of BFIL until completion of the review related to certain transactions relating to the micro finance lending arm.

An ongoing review and the continued employment of Saxena and Damani is critical to the closure of such process, the bank said.

Earlier this month, the bank had refuted a whistleblower allegations on loan evergreening at BFIL as inaccurate and baseless, however, it admitted to disbursing 84,000 loans without customers consent in May due to a “technical glitch”.

“The bank strongly denies the allegations of ‘evergreening’. All the loans originated and managed by BFIL, including during the Covid period which saw the first and second waves ravaging the countryside, are fully compliant with the regulatory guidelines,” an official statement from the bank said on November 6.

“BFIL and the bank are in the process of evaluating and undertaking appropriate steps and actions, including strengthening the management of BFIL to continue its usual business operations under the able guidance of its management and the bank,” as per the filing.

Meanwhile, Spandana has sought time from Sebi to publish its financial results for quarter ended September 30, 2021, citing the recent management level changes at the company.

It was supposed to publish its financial results before November 14, 2021 — as the listed companies are required to publish the same to the stock exchanges within 45 days from the close of a quarter.

On November 2, Spandana informed that its Founder & Managing Director Padmaja Gangireddy had resigned from the company from immediate effect.

Hyderabad based Spandana Sphoorty is a rural-focussed non-banking financial company and a microfinance lender.

Stock of IndusInd Bank traded at Rs 990.95 apiece on BSE, up by 1.06 per cent from the previous close. Spandana Sphoorty scrip was down by 3.82 per cent at Rs 439.45.



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Spandana Sphoorty appoints Shalabh Saxena as new MD and CEO

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The country’s second-largest microfinance institution, Spandana Sphoorty, on Monday announced the appointment of Shalabh Saxena as its new Managing Director and CEO, and Ashish Damani as the President and Chief Financial Officer.

While Saxena is currently serving as the MD and CEO of Bharat Financial Inclusion Ltd (BFIL), Damani has nearly two decades of experience at BFIL and is currently serving as its Chief Financial Officer, Spandana said in a statement.

“Both Saxena and Damani will join Spandana soon,” it further said. In a stock exchange filing, Spandana said the board has approved the appointment of Saxena for five years from the date of joining.

The Board has also appointed Abanti Mitra, an independent director with Spandana since 2011, as non-executive Chairperson of the Board with immediate effect. “Outgoing Chairman, Deepak Vaidya, will continue to serve on the Board as an independent director,” it said.

Spandana has been in the spotlight after its founder and erstwhile Managing Director Padmaja Reddy stepped down over concerns over a plan to sell the company to Axis Bank. It had on November 2 announced a change in its leadership structure, following the resignation of Reddy and had confirmed the hiring of an eminent industry veteran as its new MD and CEO.

In its statement on Monday, Spandana said the Management Committee of the board is fully engaged in supporting day-to-day operations. The company has also hired independent third-party firms Alvarez & Marsal, PwC and CAM to provide support and conduct special review exercises during the leadership transition, and they are already fully engaged.

Transition

The Management Committee is also in the process of addressing gaps in the transition of services after Reddy stepped down.

“Shortly prior to her resignation, Reddy had transferred the company’s IT systems to a new IT vendor and outsourced its management to that vendor,” Spandana said, adding that there has been no meaningful impact on the day-to-day business operations of the company from this.

It is engaging with the new vendor appropriately and has also made good progress on creating a parallel IT environment.

Additionally, some potential concerns have been brought to the board’s notice regarding certain gold loan branches of Spandana’s subsidiary, Criss Financial Limited. It is currently in the process of confirming the status of the same, the company said.

The matter relates to its branches with a combined portfolio of less than one per cent of Spandana’s consolidated AUM, and therefore would not have a material financial impact on the company.

Business update

Spandana’s business demonstrated healthy performance in the quarter that ended September 30, 2021 (unaudited basis), with standalone collection efficiency for the entire quarter of 105 per cent and 113 per cent for September, including pre-payments, the company said.

The standalone disbursal volumes are also healthy at over ₹1,150 crore for the quarter ended September 30, 2021, it further said.

It has resumed the audit of the financial results for the quarter ended September 30, 2021, following a brief transition-related hiatus and expects to announce results in the next few weeks.

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CredAvenue facilitates ₹ 337.5-crore debenture issue from Spandana Sphoorty

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Chennai-based CredAvenue on Wednesday announced that it has facilitated the largest ever Market Linked Debenture (MLD) issuance of ₹337.5 crore in the microfinance (MFI) sector through its online bond platform “Plutus”.

The enterprise debt marketplace said, the MLD issue from Spandana Sphoorty Financial Ltd (SSFL) received very strong interest and participation from HNI investors, family offices and corporate treasuries. SSFL MLDs have been assigned a rating of IND PP-MLD A/ Stable by India Ratings, implying low credit risk.

“We are excited to partner with CredAvenue in this landmark transaction. It is good to see heightened interest from retail investors in both our company and the microfinance sector. Funds raised through this issuance will help us scale our business profitably at an accelerated pace,” Padmaja Reddy, Founder and MD, SSFL said.

“Plutus platform offers retail investors a unique opportunity to invest in various debt instruments catering to their lifecycle requirements. One of the products on the platform, Market Linked Debentures (MLDs) have seen strong traction with retail investors. Our platform has cumulatively placed around ₹2,500 crore of MLDs in less than nine months” the statement quoted Sarath Bhaskaran, Head, Outreach, Plutus as saying.

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Axis Bank explores MFI stake buy to expand into rural India, BFSI News, ET BFSI

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KOLKATA/MUMBAI: Private sector lender Axis Bank is in talks with a few micro lenders including Arohan Financial Services, Satin Creditcare Network and Spandana Sphoorty Financial as it explores possible stake buy to expand into rural India, following the footsteps of IndusInd Bank and Kotak Mahindra which chose to improve their rural footprint through the acquisition route.

The talks have begun, three people familiar with the matter told ET. There’s no certainty on which of the negotiations would conclude in a transaction.

Axis Bank already has a micro lending vertical and acquisition of a microfinance company may suit well in its strategy to reach out to the deeper pockets of the market, a person familiar with the matter said. Axis already has 1.5 million microfinance borrowers under its belt.

“The bank is exploring early stage talks with a few microfinance lenders. It’s too early to talk about it as nothing has been finalised yet, but the idea is to widen the footprint in the rural and priority sector space,” said an official who was aware of the talks. “The bank also feels that such a buyout would help to increase its presence in eastern and southern India.”

Getting acquired also suits MFIs especially those without strong promoter backing. Micro lending needs regular infusion of capital to keep pace with the lending growth. Bharat Financial Inclusion, which was the largest MFI before being acquired by IndusInd, was stifled for growth as it had to promoter backing.

India’s Rs 2.48 lakh crore microfinance sector grew by 17% year-on-year even in the pandemic ravaged FY21, reflecting the opportunities available in this space. Universal banks control 44% of the market while NBFC-MFIs have 32% share. The balance is with small finance banks, other non-banking finance companies. NGO-MFIs have around 1% of the market share.

“For any possible acquisition, it’s important for Axis Bank to check whether the MFI has a robust IT system. Otherwise, it would be a tedious task for the bank to integrate the IT platforms,” said a person who was part of the IndusInd-Bharat Financial merger process.

Axis Bank did not respond to ET’s mail.

Arohan Financial Services managing director Manoj Nambiar and Satin Creditcare Network chairman HP Singh declined to comment on the matter while Spandana managing director G Padmaja Reddy did not respond to calls and text messages.

Microfinance is a way of unsecured lending to economically weaker populations, especially women, but prospects of higher returns push banks to explore such businesses. The acquisition route helps banks to get rural loan pie on a platter. IndusInd acquired Bharat Financial in 2019, three year after Kotak Mahindra Bank‘s acquisition of BSS Microfinance.



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