Hyderabad/Mumbai, July 6: Auditors of SKS Microfinance have uncovered fraudulent transactions worth Rs 7.48 crore, deepening worries about financial propriety at the country’s largest microfinance institution. The fraudulent transactions arose because of shenanigans ranging from cash embezzlement by employees to loans given out to fictitious borrowers.

S.R. Batliboi & Co, the company’s auditors, said in the annual report for 2010-11 that there were 156 cases of alleged cash embezzlement by some of its employees who cheated the company of Rs 1.60 crore in the fiscal. “Fifty-two of the employees were absconding and that the outstanding balance (net of recovery) aggregating over Rs 96.34 lakh has been written off pending legal proceedings,” said M.R. Rao, CEO of SKS Microfinance.

Rao said the auditors had also found 205 cases of loans given to non-existent borrowers on the basis of fictitious documentation created by the employees of the company aggregating to Rs 4.5 crore, of which the outstanding loan balance (net of recovery) of over Rs 3.54 crore has also been written off.

There were 47 cases of impersonation involving Rs 1.38 crore that was reported missing. The firm had no alternative but to write off more than Rs 63.86 lakh. The net impact of all frauds came to around 0.07 per cent of the total loan disbursed during the year, Rao said. Meanwhile, Vikram Akula, executive chairman of SKS, said the Andhra Pradesh MFI act had led to a 5 per cent fall in SKS’ performance which had a net profit of Rs 111.63 crore in 2010-11 against Rs 173.95 crore a year ago.