Axis Bank says report alleging Rs 44,000 crore exposure to SREI Group 'grossly inaccurate'

Axis Bank on December 15 said that it followed underwriting practices and approval processes while extending loans to Srei Equipment Finance Ltd and Srei Infra Finance Ltd. In a notice to the stock exchanges, the bank said that its outstanding exposure to Srei group is Rs 800 crore as opposed to Rs 44,000 crore alleged by web portal Scams Breaking.

"The bank has complied with its underwriting practices and approval processes for any exposure taken in relation to SREI Equipment Finance Limited and SREI Infra Finance Limited. Axis Trustee Services Ltd acts in its fiduciary capacity as a trustee and/or custodian and charges registered by it is not a reflection of the exposure of Axis Bank Ltd," it said.

"In summary, the report is grossly inaccurate and baseless in so far as Axis Bank Limited’s outstanding to SREI entities or underwriting practices and processes are concerned," it said

Scams Breaking in a report said that the private lender issued loans to Srei Group without due diligence.

"As per the records maintained by MCA21 (A ministry of Corporate affairs website) the Axis Bank etc have provided loans to SREI Infrastructure and Finance Limited to the tune of INR 44,000 crores without any due diligence and verification of end use of the loan amount. This loan amount has been disbursed with sham receivables including related party transactions," the portal said.

The Reserve Bank of India (RBI) has appointed an auditor to conduct a special audit of Srei Infrastructure Finance and its subsidiary Srei Equipment Finance (SEFL).

In a stock exchange filing, Srei Infrastructure Finance had said, “We would like to inform you that a special audit of the company and its subsidiary, Srei Equipment Finance Limited is being undertaken by an auditor appointed by Reserve Bank of India (RBI) in the exercise of its powers under Section 45 MA(3) of the RBI Act, 1934.”

Srei Infrastructure Finance reported a drop of 91.5 percent in its consolidated net profit at Rs 4.72 crore in the second quarter ended September 2020. It had posted a net profit of Rs 55.37 crore in the year-ago period.