Bandhan Bank COO denies any NCGTC audit link to Ghosh’s retirement

The NCGTC is conducting a forensic audit on about Rs 23,300 crore of loans disbursed by Bandhan Bank under the government's credit guarantee schemes.

Private sector lender Bandhan Bank on April 8 said that the National Credit Guarantee Trust Company (NCGTC) audit has no relation to the retirement of Chandra Shekhar Ghosh, managing director and chief executive officer of Kolkata-based lender, said its executive director and chief operating officer Ratan Kumar Kesh.

“The audit is still going on and it is going to take another one month or so to conclude. And we have not heard anything from the auditor or NCGTC in this regard. Therefore, it has no linkage to the audit,” Kesh said during an analyst call on April 8.

The NCGTC is conducting a forensic audit on about Rs 23,300 crore of loans disbursed by Bandhan Bank under the government's credit guarantee schemes. The NCGTC has flagged that the loans were either evergreen or that Bandhan Bank created fictitious accounts to obtain the maximum guarantee cover. It suspects that Bandhan Bank created fictitious accounts to apply under both CGFMU and ECLGS schemes in order to get the maximum guarantee cover. It also fears that some loans under the CGFMU scheme were evergreened.

Evergreening is the practice of extending new or additional loans to a borrower unable to repay existing loans, thereby concealing the true status of an NPA or bad loan.

The loans are under two categories of guarantee schemes known as CGFMU and ECLGS.

Also read: MC Explains | Bandhan Bank's loans worth Rs 23,300 crore are being probed. Here's why

CGFMU are loans amounting to about Rs 20,800 crore in respect of around 29 lakh borrowers under the Credit Guarantee Fund for Micro Units. In this category, micro and small enterprises can avail of collateral-free credit. ECLGS are loans amounting to about Rs 2,500 crore in respect of around 22 lakh borrowers under the Emergency Credit Line Guarantee Scheme (ECLGS) announced as part of the Aatmanirbhar Bharat Package in 2020, during the Covid-19 crisis.

Retirement

The bank on April 5 said that Ghosh will retire from the post after his tenure ends on July 9. Earlier, on November 24, 2023, the board of the bank had approved his reappointment as the MD and CEO of the bank for a period of three years.

Moneycontrol exclusively reported that the decision to step down from executive positions after his tenure comes to an end in July 2024 is voluntary, and the bank has already begun the search for a new CEO. “Let me make it clear that this is a voluntary decision. I have been thinking of retirement for nearly a year and have taken a call now,” Ghosh said.

His comments came against the backdrop of speculation that the RBI has refused to grant him another term as CEO and MD. “There is no communication from the RBI on this,” Ghosh told Moneycontrol. Ghosh’s current three-year term is ending on July 9

After his retirement as the CEO, Ghosh will take up what he termed as a “strategic role” at the group holding company level, advising the group’s business verticals, he said. Bandhan Bank has insurance and mutual fund subsidiaries under the holding company. Bandhan Financial Holdings Ltd owns about 40 percent of Bandhan Bank.