Bharat Financial top officials resign to join rival Spandana Sphoorthy

Top executives of Bharat Financial Inclusion (BFIL), a fully-owned subsidiary of IndusInd Bank, have resigned from the company last week, the bank said on Monday.

The bank said it has appointed an Executive Director and another person to oversee day-to-day operations of the company.

Shalabh Saxena, the Managing Director & CEO, and Ashish Damani, the Executive Director & CFO of BFIL, are to join rival microfinance lender Spandana Sphoorty, over which the two companies are apparently at loggerheads.

"Shalabh Saxena and Ashish Damani, currently employed with BFIL in the capacity of the Managing Director & CEO and the Executive Director & CFO, respectively, have tendered their resignations pursuant to emails addressed to the Chairman of the board of BFIL on November 25, 2021," IndusInd Bank said in regulatory filing.

The bank said, in the interim, it has nominated J Sridharan as Executive Director on the board of BFIL and appointed Srinivas Bonam to oversee the day-to-day functioning of BFIL.

Last week, IndusInd Bank in a clarification said that Saxena and Damani were employed with BFIL, countering that they have been appointed by Spandana Sphoorty Financial Ltd (SFFL).

Prior to this, SFFL had announced that it had appointed Saxena as its MD & CEO, and Damani as the President and CFO of the company.

The private sector lender said that Saxena and Damani have offered their assistance in the ongoing review of transactions related to BFIL, for which the bank has appointed a "renowned international audit firm" to conduct independent review and ascertain veracity of the anonymous complaints.

Earlier this month, the bank had refuted a whistleblower's allegations on loan evergreening at BFIL as inaccurate and baseless, however, it admitted to disbursing 84,000 loans without customers consent in May due to a technical glitch.

"The bank strongly denies the allegations of 'evergreening'. All the loans originated and managed by BFIL, including during the Covid period which saw the first and second waves ravaging the countryside, are fully compliant with the regulatory guidelines," a statement from the bank had said on November 6.

Further to resignations of these executives, IndusInd Bank said, "The board of BFIL has deferred consideration of the decision to relieve them until the completion of the ongoing review".

On November 23, the bank had said that neither Saxena nor Damani had tendered his resignation and once it was submitted, it was subject to the acceptance by the board of BFIL. Upon acceptance, a specified notice period is also required to be served, it had said.

It also said that they were prohibited from accepting employment at a competitor of BFIL (such as SSFL), unless approved in writing by the board of BFIL.

However, the bank has not mentioned if the two executives are still required to serve their notice periods.

On November 22, Spandana had announced that Saxena accepted the position of Managing Director & Chief Executive Officer, and Damani as the President & Chief Financial Officer of the company, respectively.

Hyderabad-based Spandana Sphoorty is a rural-focussed non-banking financial company and a microfinance lender.

Besides, Spandana is yet to publish its financial results for quarter ended September 2021 due to management level changes and it has sought time from Sebi to publish the same with a delay.

Listed companies are required to publish their financial results to the stock exchanges within 45 days of ending of a quarter.

IndusInd Bank shares traded 0.48 per cent down at Rs 897.15 on BSE. Spandana Sphoorty was down by 5.34 per cent at Rs 399.95 apiece in the preclose session.