How Indostar Capital’s share prices went into a free fall
The NBFC’s shares ended trading at Rs 145 a piece on the National Stock Exchange (NSE) tod
ay, 76 percent lower than its listing price of Rs 600 on May 21, 2018.
What went wrong?
Troubles for Indostar Capital started on May 6, when it first informed exchanges that it may be required to make additional expected credit loss (ECL) provisions of Rs 557-677 crore due to “certain observations and control deficiencies” noted by an external auditor in its commercial vehicle (CV) loan portfolio.
As per the investigation, the NBFC had deviated from the credit policy for loan approval for loans to certain existing customers, while also granting some waivers for foreclosure of loans.
The NBFC did not follow detailed steps for restructuring loans, as per the audit. It said that a review will be undertaken to ascertain the root cause of deviations from policies, and to plug gaps in internal financial controls and systems.
No comments