SKS Microfinance cheated to tune of Rs 7.50 cr by own staff | business | Hindustan Times
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SKS Microfinance cheated to tune of Rs 7.50 cr by own staff

Auditors of SKS Microfinance have identified 408 cases of alleged cash embezzlement and frauds by some of the micro-lender's employees who had cheated the firm to the tune of nearly Rs 7.50 crore during FY 11.

business Updated: Jul 06, 2011 20:17 IST

Auditors of SKS Microfinance have identified 408 cases of alleged cash embezzlement and frauds by some of the micro-lender's employees who had cheated the firm to the tune of nearly Rs 7.50 crore during FY 11.

According to the firm, the auditors have identified as many as 156 cases of cash embezzlements by its employees, aggregating to Rs 1.60 crore during the last financial year.

"We have been informed that 52 of these employees were absconding. The outstanding balance (net of recovery) aggregating to Rs 96,34,467 has been written off," said SKS Microfinance auditors S R Batliboi & Co in the annual report.

The services of the 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 to Rs 3,54,17,295. Besides, 47 cases of impersonation in borrowing loans from the lender to the tune of Rs 1.38 crore were reported during the last fiscal, the report said.

It said SKS Microfinance is pursuing the borrowers to repay the loan amount, while the outstanding balance (net of recovery) aggregating to Rs 63,86,267 has been written off.

"The net impact of frauds comes to around 0.07% of the total loan amount disbursed during FY 11. The company is working towards reducing this percentage by making process improvements, covering the losses by having an adequate insurance policy and increasing opportunities for direct contact with our borrowers."