Shares of IndusInd Bank fell over 9 per cent on the stock exchanges on Monday in opening trade and weakened further during the afternoon session.

IndusInd Bank shares were trading 10.41 per cent lower at Rs 1,065 apiece on the Bombay Stock Exchange (BSE) and were down 10 per cent on the National Stock Exchange (NSE) at 12:15 pm.

WHY SHARES OF INDUSIND BANK FELL TODAY?

The shares fell after a recent report, citing a whistleblower complaint about “evergreening of loans” at the bank’s microfinance lending arm, Bharat Financial Inclusion Limited (BFIL). IndusInd Bank’s management has refuted the media report, adding that it is “inaccurate and baseless”.

The bank clarified that a technical glitch resulted in loans getting disbursed to customers’ accounts without their consent. IndusInd Bank has said the problem has been rectified and it has made biometric authorization compulsory for loan disbursements. It has also initiated an independent review to find out any process lapse or accounting failure at BFIL.

Motilal Oswal had said in an earlier note that the stock could face pressure today due to adverse media reports and the asset quality stress reported by some other microfinance institution (MFI) lenders.

Nevertheless, we expect the impact to be controlled. We maintain BUY, with an unchanged target price of 1,400,” the brokerage added.

In reply to a news report citing a whistleblower complaint about evergreening of loans in its MFI arm BFIL, the bank said in a recent stock exchange filing that the bad loan recognition process is fully automated in accordance with the regulatory norms.