Mahindra & Mahindra Financial Services has reported a 10% decline in standalone profit and tax to INR 619 crore for the January-March quarter of 2023-24, compared to INR 684 crore in the same period last year.

The non-banking finance company also said that in a fact-finding assessment of the fraud in its Aizawl branch during the quarter identified 2,887 loan accounts as potentially fraudulent in nature.

"These loans had an outstanding net recoverable balance of INR 135.9 crore as of 31st March 2024, which have been fully provided," Mahindra Finance said in a regulatory filing.

The NBFC, which last month delayed disclosure of its financial statement due to fraud at one of its branches in the north-eastern states, said that the fraud relates to retail vehicle loans disbursed by the company and is a case of extreme collusion between the company's employees, with segregated duties, and external parties including vehicle dealers and bank employees.

The fraud involved forgery of KYC and other asset-related documents leading to the embezzlement of company funds. Following this, the company appointed a law firm and an accounting firm to undertake a fact-finding assessment of the suspected irregularities.

The company has carried out an exhaustive analysis of customer contracts across the portfolio at an all-India level and has confirmed no instances of similar fraud elsewhere.

"As a proactive step, the company has identified a few key initiatives to further strengthen controls, including but not limited to accelerating the timeline for centralization of document reviews and implementing digital due diligence tools for customer onboarding," Mahindra Finance said.

During the March quarter of 2023-24 fiscal, Mahindra Finance posted a total income of INR 3,706 crore, up 21% over INR 3,057 crore in the year-ago period. Net interest income rose 14% to INR 1,971 crore during the fourth quarter of FY24.

For the 2023-24 fiscal, the profit after tax declined 11% to INR 1,760 crore. Total income rose 23% to INR 13,562 crore in FY24.

“In FY24, the company strengthened its position in the financing of passenger vehicles, pre-owned vehicles, and tractors. Growth in non-vehicle businesses such as SMEs, digital finance, leasing, and other lending and non-lending financial solutions segments contributed towards achieving steady annual disbursement numbers,” Mahindra Finance said in a press release.

Shares of Mahindra & Mahindra Finance closed 0.57% higher at INR 266.20 apiece. The stock of the non-bank lender has had a subdued last 12 months, gaining close to 7% but underperforming most of its peers.

Article Source – PTI, Mahindra Finance (Press Release)