It appears that trouble isn’t ending for ICICI Bank after a whistleblower revealed that the private firm had issued hundreds of letters of credit (LC) to entities related to its troubled corporate borrowers to help them avoid default, Mint reported on Thursday.
It appears that trouble isn’t ending for ICICI Bank after a whistleblower revealed that the private firm had issued hundreds of letters of credit (LC) to entities related to its troubled corporate borrowers to help them avoid default, Mint reported on Thursday.
According to the complaint by an anonymous ICICI Bank employee who wrote to the bank and the Reserve Bank of India (RBI) on March 20 and March 22, ICICI bank also sanctioned a large number of term loans to entities related to the 31 borrowers named in the complaint. These loans, the complainant said, were granted ignoring the warnings raised by internal auditors.
The complainant named Essar Global, Bhushan Steel, NCML Industries, Bhatia Global, Bhushan Energy, Essar Steel and Tecpro Systems among these 31 companies.
Meanwhile, a preliminary examination by regulator Sebi has favoured adjudication proceedings against ICICI Bank and its CEO Chanda Kochhar for alleged violation of listing disclosure norms regarding 'conflict of interest' in business dealings of her husband with Videocon group.
ICICI Bank may face a penalty of up to Rs 25 crore under the relevant Sebi regulations for such lapses, while the fine for Kochhar may go up to Rs 1 crore, besides other penal actions, a senior official said.
The adjudication process will convene formally soon after taking into account the replies to the show-cause notices issued by Sebi to ICICI Bank, Kochhar and others in this matter, the official added.
Besides Sebi probe, ICICI Bank's board has also constituted an "independent enquiry" and Kochhar has gone on leave till completion of this enquiry.
According to a regulatory filing by the bank last week, Kochhar will continue as MD and CEO, though the group's life insurance arm head Sandeep Bakshi has been appointed as a whole time director and COO. Bakshi will report to Kochhar and will handle the day-to-day operations in her absence.
The bank has maintained that its board has full faith in Kochhar.
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