ICICI Bank probe finds no substance in irregularities cited in 31 loan accounts

An internal probe instituted by ICICI Bank has found no irregularities in the 31 loan accounts cited by a whistle blower as instances of accounting frauds.

In a regulatory filing, the bank said the charges of incorrect accounting of interest income, overvaluation of security and incorrect asset classification, brought by the whistleblower, did not stand scrutiny.
ICICI Bank on Friday said the anonymous complaint received by it in March 2018 alleged irregularities in the conduct of 31 loan accounts with an outstanding of Rs6,082 crore, representing over 1 per cent of the bank’s gross loans.
An enquiry carried out under the supervision of the audit committee of the bank’s board found that in some of the accounts there were transactions which may have delayed their classification in the non-performing asset (NPA) category.
At the end of March 2018, these accounts constituted 1.1 per cent of gross loans. The provision coverage (including prudential / technical write-offs) for these accounts was 50 per cent.
“Based on the procedures performed in the enquiry, the allegations relating to incorrect accounting of interest income and NPA recoveries as fees, and overvaluation of security for corporate loans, were not borne out. In certain accounts, transactions were observed that may have delayed the classification of the account as nonperforming under Indian GAAP (generally accepted accounting principles) in earlier years,” the notification said.
All of these loans are fully classified as non-performing, with provisions made as per applicable norms, the notification said, adding that most of them were classified as such between FY12 and FY17. 
Two of the accounts were classified as NPA by December 31, 2017. “Thus, all these loans had been classified as non-performing prior to the Bank becoming aware of the complaint,” the bank said in the notification.
The need for the probe has arisen as it followed allegations that its CEO Chanda Kochhar’s husband Deepak Kochhar benefited financially through his company NuPower Renewables from the business relationship between ICICI Bank and the Videocon Group. Investigative agencies, including the Enforcement Directorate and the Central Bureau of Investigation have been pursuing an enquiry into the matter.
After a marathon meeting on Monday, the ICICI Bank board appointed Sandeep Bakhshi, CEO and managing director of ICICI Prudential Life, as whole-time director and chief operating officer (COO)-designate for a period of five years (See: Sandeep Bakhshi made ICICI Bank COO; Kochhar is CEO 'on leave').