MUMBAI: ICICI Bank on Wednesday confirmed that the US Securities Exchange Commission’s (SEC) information requests regarding the private lender’s loan impairment provisions. The bank added that it voluntarily complied with all the SEC’s requests, but was in the process of responding to the notice from SEBI.
“The Bank has voluntarily complied with all requests of the SEC investigatory staff for information and interviews related to the bank’s US GAAP loan impairment process,” it noted in its in its annual Form 20 F filing with the US markets regulator.
It added that the bank’s internal enquiry regarding the second whistleblower complaint alleging incorrect asset classification found that “certain accounts, transactions were observed that may have delayed the classification of the account as non-performing in earlier year.”
The whistleblower made damning allegations including irregular transactions in borrower accounts, incorrect accounting of interest income and non-performing asset recoveries as fees, and overvaluation of collateral securing corporate loans related to 2016 fiscal and earlier. ICICI, however, said the deviations it found will have no material impact on its accounts, but is investigating with assistance from an external counsel.
Meanwhile, for the first time, the lender admitted about the CBI investigation following allegations against it since March 2018. Besides, it also highlighted the risks to its business from enquiries into its MD & CEO Chanda Kochhar’s loan dealings as well as a second enquiry into NPA loan accounts to the SEC.
“The bank is in the process of responding to the relevant allegations in the notice (from SEBI) which pertain to the bank. The Central Bureau of Investigation also initiated a preliminary enquiry against various individuals and firms, including unknown officers and/or officials of the bank,” it noted.
In a separate filing for its AGM scheduled on September 12, the bank disclosed the remuneration for its new Chief Operating Officer Sandeep Bakhshi, who has been appointed in place of Chanda Kocchar, who is on indefinite leave.Bakhshi’s salary for FY19 would be `4.81 crore, including a monthly basic salary of `23.81 lakh and a supplementary allowance of `16.32 lakh, while Kochhar took home `6.4 crore in FY18.
Merger on the horizon?
Mumbai: ICICI Bank said the private lender may be required to undertake mergers, if the RBI mandates it under its statutory powers. “In the past, the RBI has ordered mergers of weak banks with other banks primarily in the interest of depositors of the weak banks.
More recently, the Indian government has indicated that PSBs should pursue consolidation to create fewer banks that would be individually larger in scale,” ICICI disclosure said. It said the bank may seek growth opportunities through acquisitions, divest its existing businesses, including subsidiaries for various reasons including changes in strategic focus, redeployment of capital, contractual obligations and regulatory requirements.