SKS Microfinance witnessed financial frauds to the tune of Rs 2.1 crore during fiscal year 2013 and is taking a slew of measures to prevent its employees from indulging in such offences.
Investigations are in progress and services of employees involved in the fraud have been terminated and the company is in the process of taking legal action, according to the company’s latest annual report.
“We (auditors) have been informed that during the year there were instances of cash embezzlements in the company aggregating Rs 1,27,62,403; loans given to non-existent borrowers on the basis of fictitious documentation created by the employees of the company aggregating Rs 83,32,870 and misappropriation of cash by an external party, amounting to Rs 4,55,000,” company auditors SR Batliboi and Co said in their comments.
Responding to the auditors’ comments, SKS said cash embezzlement is 0.04 per cent of disbursement during the year and to mitigate this risk to a large extent the management has put in place several preventive control measures.
SKS’ action plan includes procuring indemnity bond from every field staff, with personal guarantee of a third person, besides ensuring that every bank transaction (deposit/withdrawal) to be executed by a minimum of two employees, comprising a bank signatory and a confirmed staff, the company has informed.
The net impact of frauds comes to around 0.06 per cent (vis-a-vis 0.51 per cent over last year) of the total amount disbursed by the company during FY13.