SKS Micro staffers swindled Rs 1.6 cr in FY11: Auditors
According to the company, the auditors have identified as many as 156 cases of cash embezzlement by its employees, aggregating to Rs 1.60 crore during the financial year.
"We have been informed that 52 of these employees were absconding. The outstanding balance (net of recovery) aggregating Rs 9,634,467 has been written off," said company auditors S R Batliboi & Co in the annual report.
The services of the concerned employees involved in the fraud have been terminated and the company is in the process of taking legal action against them, the auditors said.
The auditors have also brought under its lens 205 such cases where loans were disbursed to non-existent borrowers on the basis of fictitious documents created by the SKS staffers, aggregating Rs 4.50 crore during the financial year.
The company had to write off the outstanding loan balance (net of recovery) aggregating Rs 35,417,295.
Besides, 47 cases of impersonation in borrowing loans from the lender to the tune of Rs 1.38 crore were also reported during the year, the report said.
SKS Microfinance is pursuing the borrowers to repay the loan amount, while the outstanding loan balance (net of recovery) aggregating Rs 6,386,267 has been written off, it said.
"The net impact of frauds comes to around 0.07 per cent of the total loan amount disbursed during the year. The company is working toward reducing this percentage by making process improvements, covering the losses by having an adequate insurance policy and by increasing opportunities for direct contact with our borrowers.
"During the year, the company has recovered an amount of Rs 0.96 crore against fraud amount written off in the previous years," SKS Microfinance said.
SKS Microfinance Executive Chairman Vikram Akula remarked, "There was an external political attack on microfinance that culminated into draconian provisions of a microfinance law passed in Andhra Pradesh, the Andhra Pradesh MFI Act."
The Act has resulted in a slight reduction, up to 5 per cent, in the company`s growth, the report said.
The MFI Act mandates prior approval of every loan application by state government authorities.
It was promulgated in the wake of a spate of suicides by borrowers, allegedly due to the coercive recovery practices employed by the MFI agents.