Sydney-based Scams Breaking on Monday alleged that Axis Bank gave loans to Srei Group without proper due diligence and checking the end use of funds
MUMBAI: Private sector lender Axis Bank on Tuesday said 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 its outstanding exposure to Srei group stands at ₹800 crore as against the ₹44,000 crore alleged by Sydney-based Scams Breaking on its website.
“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 insofar as Axis Bank Limited’s outstanding to SREI entities or underwriting practices and processes are concerned."
Website firstname.lastname@example.org on Monday alleged that Axis Bank gave loans to Srei Group without proper due diligence and checking the end use of funds.
“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 alleged.
Reserve Bank of India is in the process of conducting a special audit of Srei Infrastructure Finance and its subsidiary. Rating agency Brickwork ratings has downgraded long-term ratings of the firm to BB from BBB- due to continued stress on asset quality in the equipment and infrastructure financing loan portfolios, a significant decline in profitability, and stretched liquidity position of the company because of low collections. It has placed ratings of the company under "watch with negative implications".
For the September quarter, the firm reported a 91.5% year-on-year slump in its consolidated net profit to ₹4.72 crore. Loan book stood at ₹35,222 crore as of 31 March.