ICICI investors lose over ₹19,000 crore in 4 days
Bank Ltd has shed over ₹19,066.46 crore in market value in the four trading sessions beginning Monday when Mint reported on a whistleblower complaint and a consequent central bank investigation.
The stock closed 2.8% lower at ₹271.15 on Thursday, nearing a three-month-low, and down 2.8% over its previous close. It has lost over 11% in the last four sessions and nearly 13% in the year to date.
On Thursday, Mint reported, citing a whistleblower’s letter, that the bank issued hundreds of letters of credit (LCs) to entities related to its troubled corporate borrowers to help them avoid loan default, pre-empting the need to set aside money for nonperforming assets (NPAs). The report also said ICICI Bank deliberately failed to set aside funds to provision for 31 defaulting loan accounts between fiscal year 2008 and March 2016, not fiscal 2017.
ICICI bank on June 22 said, “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.” Earlier, Mint had reported that Reserve Bank of India (RBI) initiated a second probe on March 25 into the affairs of ICICI Bank for allegedly delaying provisioning for stressed loans and so-called loan evergreening, among other wrongdoings. The first probe was initiated in 2016 after another whistleblower alleged conflict of interest in CEO Chanda Kochhar’s dealings.
The series of probes started after, the Central Bureau of Investigation (CBI) registered a preliminary enquiry against Chanda Kochhar’s husband Deepak Kochhar and businessman Venugopal Dhoot to investigate alleged conflict of interest in a ₹3,250 crore loan made by ICICI Bank to Dhoot’s Videocon group. ICICI Bank had extended the loan as part of a ₹40,000 crore loan by a consortium of 20 banks in 2012. Securities and Exchange Board of India (Sebi) has also asked ICICI Bank to clarify on reports of alleged corporate governance breach. The tax department had in April issued notices to Deepak Kochhar to look into the flow of about ₹325 crore from two Mauritius-based firms to NuPower Renewables, which he once co-owned with Dhoot.
Following this, in May, the ICICI Bank board instituted a fresh inquiry into the allegations and asked its chief executive (CEO) Kocchar to go on indefinite leave till probe is over. The bank announced retired supreme court judge BN Srikrishna would head the inquiry and appointed Sandeep Bakhshi as the chief operating officer for a five-year term.