Mint has done some excellent reporting on the whistleblower complaints into ICICI. These are instructive in helping us investors understand how banks can evergreen loans while not technically evergreening them.
Here are the 3 reports:
“Effectively, ICICI Bank would have reported losses in some quarters over the eight years, had the bank’s management not deferred impairment of loans, claimed the whistleblower.”
The next here
I think RBI acted after it became clear that SEC may get into the act.
The last and the most important one today here:
ICICI Bank issued 100s of LCs to related parties of troubled borrowers to help the borrower pay so as to keep the loan good. (I guess with these LCs the related parties would have borrowed elsewhere and routed it back to ICICI)
Term loans were sanctioned afresh possibly to the extent of overdue amounts to the same bad borrower. To make the bad look good, some other borrower was asked to pay the borrower’s bad loans by extending the former’s fund / non-fund limits
Fiddling around with short term fund / non-fund limits “the bank allegedly helped a number of debtors by increasing their drawing power for cash credit by increasing their cover period; by changing cash credit to overdraft; allowing interchangeability between fund-based and non-fund-based working capital finance limits; providing fund-based sub-limits for non-fund-based limits and vice versa.”
Fiddling with the software to show results different from reality, “Bank’s term loans are accounted for in a software called SYMBOLS, which is, unlike real time core-banking system software such as FINACLE. This has been done deliberately to employ accounting activities which can be manipulated as the end-of-day (EOD) reports can be delayed or back-dated as desired”
ICICI Bank’s defense seems to me a “meow” against these roaring allegations.