Mumbai : Indostar Capital Finance has found irregularities in its commercial vehicle loan portfolio, for which the company will have to set aside additional provision. 557 – 677 crore, the company said in a stock exchange filing. The irregularities were found after a review of the CV portfolio conducted by Ernst & Young at the behest of the audit committee.
According to the non-bank lender, preliminary findings showed deviation from the company’s credit policy in loan approvals to existing customers, in relaxation in foreclosure cases, due process in restructured loans. The review is expected to be completed with the finalization of the audited financial statements for FY 2012
“The Audit Committee, in its meeting held on 31st March 2022, was informed by the Management of the Company that during the interim statutory audit of the Annual Financial Statements of the Company certain observations and control deficiencies were noticed, particularly in commercial The vehicle loan segment, as part of a review of the company’s loan portfolio, including a review of policies and procedures,” the company said. “It further appears that such aspects were primarily related to a portion of the CV loan portfolio and may have arisen accordingly. Due to the liquidity concerns with clients due to the onset of the COVID-19 pandemic
IndoStar warned that the capital adequacy ratio of the company could fall to around 25% from 35.1% as of December 31, 2021, at the high end of a potential additional debt provision.
“While the potential additional provision is expected to impact the net worth and capital adequacy ratio of the Company, the Company is expected to continue to be adequately capitalized, in compliance with the capital adequacy norms and have sufficient liquidity to satisfy its short-term and long-term liabilities,” it said.