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BENGALURU - Shares of IndusInd Bank slid as much as 11.45% on Monday after a report said whistleblowers had alleged loan evergreening at the private sector lender's micro finance arm.

On Friday, the Economic Times reported that whistleblowers had alerted the Reserve Bank of India (RBI) and the IndusInd board that Bharat Financial Inclusion (BFIL) had evergreened some loans - a practice where new loans are given to stressed borrowers to enable them to repay existing loans.

IndusInd denied the allegation in an exchange filing on Nov. 6 and said the report was "grossly inaccurate and baseless".

However, it said nearly 84,000 loans were disbursed in May without customer consent due to a technical glitch and that the issue was rectified expeditiously.

IndusInd did not immediately respond to a Reuters request for comment.

On Monday, shares of the private sector lender were the top percentage losers on the Nifty private bank index and on track for their worst session since April 2020.

Due to pandemic-related restrictions, some loans had to be disbursed via cash at BFIL, and as of September-end, only 26,073 clients out of 84,000 were active with loan outstanding at 340 million rupees ($4.58 million), IndusInd said.

In multiple emails to the RBI and the IndusInd board in October, a whistleblower group that included BFIL officials alleged that the unit had evergreened loans, inflated revenues and under-reported non-performing assets, the report said.

The report also cited two people familiar with the developments saying there was a separate whistleblower complaint from an outsider on Oct. 14 that suggestions to set up risk management and audit committees for BFIL were ignored.

In its exchange filing, IndusInd said an independent review had been initiated by the bank to see if there was any process lapse or accounting failure at BFIL.