Context:
The Reserve Bank of India (RBI) may have uncovered serious operational lapses at Spandana Sphoorty Financial, prompting the sudden resignation of its Managing Director, Shalabh Saxena, and a shake-up in top leadership. Sources allege that RBI found unreported frauds and cash balance mismatches during a detailed inspection conducted in October–November 2024.
Key Developments
RBI Inspection and Alleged Lapses
- RBI’s inspection reportedly lasted 19 days, significantly longer than the usual 3–4 days for routine audits.
- Unreported frauds and discrepancies in branch-level cash balances were allegedly found.
- The regulator is said to be reviewing top management’s accountability in these lapses.
Leadership Exit
- Shalabh Saxena resigned this week, citing personal reasons and plans to explore new opportunities.
- He has denied any wrongdoing, stating that all cash is accounted for.
- Ashish Kumar Damani, CFO, has been appointed interim CEO, with Saxena assisting in a 3-month transition.
RBI’s Silent Watch
- While RBI has not issued a public statement, it reportedly held meetings with independent directors, although Saxena denied this occurred.
Financial Stress Indicators
- Spandana reported consecutive quarterly losses:
- ₹440 crore loss in Q3 FY25
- ₹216 crore loss in Q2 FY25
- Gross NPA ratio surged to 5.2% in December 2024, from 1.7% in March 2024.
- The firm disclosed covenant breaches:
- ₹373 crore in non-convertible debentures
- ₹268 crore in term loans
