The ICICI Bank has said that it received an complaint in March 2018 over "irregularities in the conduct of some borrower accounts", citing 31 borrower accounts. The complainant also alleged "incorrect accounting of interest income and NPA recoveries as fees" and "overvaluation of security for corporate loans", citing no specific examples. In a regulatory filing on Friday, the private lender mentioned that the borrower accounts cited by the anonymous whistleblower were classified as non-performing assets prior to the complaint.
"The complaint was treated as a whistle blower complaint and an inquiry was instituted as per the Whistle Blower 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," ICICI Bank said.
The statutory auditors were provided periodic updates and their inputs were factored into the inquiry process. The interim report of the inquiry was reviewed in detail by the Audit Committee and statutory auditors, prior to finalisation of the accounts for the year ended March 31, 2018.
"The findings in the interim report had no material impact on the financial statements for FY2018. The interim report has also been submitted to the regulator," the private sector lender said in its statement.
It further said the loans outstanding were fully classified as non-performing, with provisions made as per applicable norms. 29 of these borrower accounts were classified as non-performing between the year ended March 31, 2012 and the year ended March 31, 2017. The remaining two accounts were classified NPAs by December 31, 2017.
"Thus, all these loans had been classified as non-performing prior to the Bank becoming aware of the complaint," the filing said. The aggregate loans (in the 31 cases) outstanding at March 31, 2018 were Rs 6,082 crore ($898 million), about 1.1 per cent of gross loans. The provision coverage (including prudential/ technical write-offs) 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 in earlier years. As mentioned earlier, all the above loans had been classified as non-performing and provided for as per applicable norms by December 31, 2017 itself," ICICI Bank said in the regulatory filing.
Also, no disclosure on divergence in asset classification and provisioning for NPAs was required to be made by the bank with respect to RBI's annual supervisory process for 2016-17, it added.
This marks the third whistleblower complaint against the bank since 2016, which have led to several controversies including the Videocon-ICICI Bank loan case row. Banks' MD and CEO Chanda Kochhar is facing an internal probe in the matter over charges of quid pro quo. She will be on leave till the completion of the enquiry.
(With PTI inputs)