ICICI Bank Discloses Third Whistleblower Complaint

A third whistleblower complaint in as many years has alleged “irregularities in the conduct of some borrower accounts” and “incorrect accounting” at ICICI Bank Ltd.

The bank instituted an enquiry under the supervision of the Audit Committee of the board of directors and the findings of the interim report of the enquiry had no material impact on the financial statements for the year ended March 2018, the lender said in a statement to stock exchanges.

The interim report has also been submitted to the regulator, said ICICI Bank.

The complaint, made in March 2018, alleged:

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

The bank's internal investigation found that all 31 loan accounts had been classified non-performing well before the complaint was filed. Twenty nine were classified NPA between March 31, 2012 and March 31, 2017. Two others were classified NPA by Dec. 31, 2017

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

The bank's internal investigation found these allegations were incorrect.

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

The bank's internal investigation found these allegations were incorrect.

“In certain accounts, transactions were observed that may have delayed the classification of the account as non performing under Indian GAAP in earlier year,” the bank statement said, emphasising that all 31 loans had been classified NPA as per applicable norms.

The bank statement also reiterated that “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 FY2017”.

Further actions in the matter of this whistleblower complaint are being taken by the Audit Committee the bank said.

This marks the third whistleblower complaint the bank has had to deal with since 2016. The first, a blog post by an investor, alleged impropriety in loan decisions made by Chanda Kochhar, managing director and chief executive officer of the bank. It also alleged quid pro quo in approving loans to Videocon Group, that was also in business with her husband Deepak Kochhar. In March this year the bank stated, in response to news reports pertaining to the 2016 blog post, that it had reviewed internal processes for credit approval and “found them to be robust”. The bank's board expressed full faith in Chanda Kochhar.

But the board changed its stance when a second whistleblower complaint surfaced. On May 30, in a statement to stock exchanges, the bank said its board had decided to institute an enquiry into the whistleblower complaint. This one too alleged that the MD and CEO had not adhered to the code of conduct of the bank and also alleged quid pro quo while dealing with borrowers. The board said the enquiry into the allegations would be headed by an independent and credible person. Retired Justice Srikrishna is said to be heading the enquiry, BloombergQuint reported a few days ago, though the bank itself has made no formal statement confirming that.

Last week, Chanda Kochhar decided to go on leave pending the completion of the internal enquiry into allegations against her. Sandeep Bakhshi has been appointed chief operating officer and will manage the bank and report to the board in her absence.