New Whistleblower Rises Against India’s ICICI Bank

India’s private lender ICICI Bank has been identified as a bank that is ‘Too Big, to Fail’ by the Reserve Bank. Looking at the amount of stressed assets dilemma the bank has to manage, this RBI tag evokes fear about the massive potential of the impact.

Since the start of 2018, ICICI Bank has been going through doomsday scenes internally and looks like it will continue to go through more. At first, it faced investors heat due to allegations made by a whistleblower against their Managing Director Chanda Kochhar, Zeebiz reported.

ICICI Bank has now reported about a new whistleblower to stock exchanges after market hours on Friday. This time a complaint has been filed in regards to a list of 31 loan accounts. The stock price of ICICI Bank closed at Rs 300.85 ($4.43), up by 1.11% on Friday.

In the notification ICICI Bank mentioned that they received a media query with respect to a whistleblower complaint. In order to avoid asymmetry of information and selective disclosure, the bank issued a statement.

This is what it said: “In March 2018, the bank was made aware of an anonymous complaint which alleged the following relating to the financial statements of ICICI Bank in earlier years:

- Irregularities in the conduct of some borrower accounts, resulting in incorrect asset classification. The complaint cited 31 loan accounts in respect of which the above was alleged.

- Incorrect accounting of interest income and NPA recoveries as fees. No specific examples were cited in the complaint.

- Overvaluation of security for corporate loans. No specific examples were cited in the complaint.

Thereby the complaint was treated as a whistleblower complaint and an enquiry was instituted as per the whistleblower policy of the bank under the supervision of the audit committee of the board of directors, without involvement of the senior management other than Internal Audit. “

According to ICICI Bank, the position of respective 31 loan accounts, cited in the complaint, as on March 31, 2018 under Indian GAAP are as follows:

Firstly the loans outstanding were fully classified as non-performing, with provisions made as per applicable norms. These accounts were classified as non-performing between the year ended March 31, 2012 and the year ended March 31, 2017, other than two accounts which were classified by December 31, 2017.

Thus, all these loans had been classified as non-performing prior to the bank becoming aware of the complaint.

Secondly, the aggregate loans (gross of prudential/ technical write-offs) outstanding at March 31, 2018 were Rs. 60.82 billion ($898 million), about 1.1% of gross loans. The provision coverage (including prudential/ technical write-offs) was 50%.