Indostar Capital CFO Resigns Months After Accounting Lapses Were Revealed
IndoStar Capital has brought in former CFO Pankaj Thapar as a consultant to oversee financial functions at the non-banking lender.
Kapish Jain has resigned as chief financial officer of Indostar Capital Finance Ltd., barely two months after he joined.
“The company is in the process of identifying a suitable candidate for filling the position of the chief financial officer,” the company said in an exchange filing on Wednesday, but didn’t clarify the reason for Jain’s exit. For the time being, Pankaj Thapar -- former CFO of Indostar Capital -- has been brought in as a consutant to oversee the finance function at the company.
Jain was appointed to the CFO's post on May 27, weeks after IndoStar Capital revealed accounting lapses in its loan book that led to a loan portfolio review.
On May 6, Indostar Capital told the bourses that the management had informed the audit committee of the board that there were certain control deficiencies in the commercial vehicle loan portfolio. “The audit committee was informed that the control deficiencies were primarily with respect to sanctioning of loans to existing customers, loan documentation and policy implementation gaps,” it had said.
The situation, it had said, may have arisen pursuant to liquidity concerns with customers caused by the onset of the Covid-19 pandemic.
The committee had appointed consulting firm EY to conduct a portfolio review. In its initial review, it found two key areas where deficiencies existed. These included deviations from credit policy during approvals and loan waivers offered to customers and control measures not followed during restructuring of loans.
After that, Indostar Capital had to create additional expected credit loss provisions worth Rs 577-677 crore to cover for any financial hit to the balance sheet. Owing to the provisions, the capital adequacy ratio was likely to fall to 25% from 35% before, the company had said.
A final report of the review is yet to be submitted.
On June 30, Indostar Capital had said it would convene a board meeting on July 19 to consider the financial results for the quarter ended March. It, however, is yet to release the said financials.