ICICI Bank continues to sail through rough waters as the whistleblower revealed that the bank had issued hundreds of letters of credit (LC) to firms related to its debt-ridden borrowers to help them avoid default. ICICI Bank stock is down by 2 per cent today at Rs 273.50. Also Read - RBI Asks UCBs to Implement System-based Asset Classification
Evergreening has been seen as a common practice among banks, where they give more loans to debt-stricken companies to help them repay previous loans. By extending credit, they get an extra time before being classified as bad debt. A letter of credit is a letter issued by a bank to a seller to serve as a guarantee for payments if the buyer defaults. Also Read - Real GDP in 1st Half of The Year to Remain in Contraction Zone, Says RBI Governor
According to the report on Thursday, ICICI Bank sanctioned term loans to entities related to the 31 borrowers named in the complaint. The complainant has claimed that these loans were given even after warnings were raised by internal auditors. Also Read - RBI 24th Monetary Policy Committee Meet: No Change in Repo Rate, Reverse Repo Rate, Announces RBI
Bhushan Steel, Essar Global, Bhatia Global, Bhushan Energy, NCML Industries, Tecpro Systems and Essar Steel are some of the corporate names included in the list of 31 companies.
An anonymous ICICI Bank employee wrote to the bank and the Reserve Bank of India (RBI) on March 20 and March 22 about how powers were misused to give loans to big corporate houses by the ICICI Bank.
ICICI Bank has recently appointed Sandeep Bakhshi, head of its life insurance business, as whole-time director and chief operating officer (COO) while Chanda Kochhar has decided to go on leave till the internal enquiry into the Videocon loan case gets over. The decision was taken at the last board meeting of ICICI Bank
There are allegations that ICICI Bank gave loans worth Rs 3250 crore to Videocon Group. It has been alleged that NuPower Renewables, her husband’s company, received a loan on a quid pro quo basis from the Videocon Group’s Chairman Venugopal Dhoot.