AU Small Finance Bank surges over 4% after clarification on media speculations

The Bank has a full-fledged Internal Audit team with ~50 members and 7 external concurrent audit firms.

Sep 01, 2021 09:09 IST India Infoline News Service

AU Small Finance Bank has clarified to the exchange on certain points to address media speculation.

Chief Risk Officer (“CRO”):
In the bank's disclosure on August 29, 2021 it has stated the reasons around Alok Gupta’s resignation. For further information, the company informs that Alok Gupta was hired to replace Mayank Markanday (the then-CRO) who is still in the Bank (since August 2016 and remained as a CRO till March 31, 2021).

Markanday moved to his current position of Chief of Credit Card Business to further fulfil his career aspirations within Bank. The Bank also agreed to the move as having a risk professional is helpful in building an unsecured product line.

Deepak Jain, the new CRO, is a highly experienced professional and has been with the organisation since 2010 in positions of CFO and thereafter as COO.

"Appointment of a new CRO is a disclosable event (as per RBI Circular No. DBR.BP.BC.No.65/21.04.103/2016-17 dated 27th April 2017) which requires disclosure at the earlier of appointment of new CRO or last day of existing CRO’s term, which we made within the regulatory timelines", said Bank.

Head of Internal Audit:
Role of Internal Audit function is around ensuring adherence to internal control & processes designed and approved by Audit Committee and the Board of Directors. The Bank has a full-fledged Internal Audit team with ~50 members and 7 external concurrent audit firms which have remained stable over the last 4 years.

Further, it had Statutory Auditors, S.R. Batliboi & Associates LLP and Audit Committee which have remained consistent for last 8 years. As per RBI circular on auditor rotation, bank has appointed two reputed audit firms, M/s Deloitte Haskins & Sell and M/s G.M. Kapadia & Co., for a period of 3 (three) years starting from FY 2021-22.

On this clarifihe Bank said, "We had proactively brought in Sumit Dhir in place of incumbent (Nitin Gupta who had joined the Bank in 2015) in April’21, to further build our Internal Audit function. Sumit Dhir has expressed his desire to move back to his hometown Delhi due to changes in his personal circumstances following Covid 2nd wave.

He continues to be on our rolls as Head of Internal Audit and we remain in discussions with him for a possible retention. These retention discussions are as per our usual HR practices and strategy which we follow for the entire senior management team to manage business continuity, confidentiality, and competitiveness."

Change in Head of Internal Audit (who is an officer of the bank) is an internal HR matter and does not require any SEBI disclosure.

Senior Management Team:
The Bank categorically wants to confirm that there is not a single other resignation in the top-50 senior management team or the Board of Directors. The senior management team (top-50) has an average vintage of ~6.5 years with AU and remains very excited around the journey to create a leading banking franchise.

Some challenges remain around Jaipur location which the bank is addressing by scaling up Mumbai and other regional offices at key cities (like Delhi, Pune, Indore, Chandigarh etc). AU Small has disclosed this consideration in their Q1 earnings call on August 6, 2021 and AGM on August 17, 2021.

At around 9:30 AM, AU Small Finance Bank was trading at Rs1,178.60 apiece up by Rs47.85 or 4.23% on the BSE.

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