Published: Wed, May 09, 2018
Money | By Bruce West

Bank works under and abides by regulatory norms: Kochhar

Bank works under and abides by regulatory norms: Kochhar

ICICI Bank had posted a near 50 per cent drop in net profits in the fourth quarter of 2017-18 due to a spike in provisions for bad loans.

At NSE, shares of the company jumped 8.52 per cent to Rs 314.50.

ICICI Bank saw a rise in slippages during the fourth quarter, which rose to Rs 15,737 crore from Rs 4,380 crore in the third quarter.

The bank also disclosed that it has made a full provision of almost Rs795 crore, partly through profit and loss account and debiting reserves and surplus, in the fourth quarter towards three accounts from the gems and jewellery sector, which are classified as fraud and NPA.

ICICI's bad-loan ratio rose to 8.84% from 7.82% at the end of December, the highest among top private lenders in the country, and compared with 1.3% at larger rival HDFC Bank Ltd. In the year-ago period, the same stood at Rs 2,025 crore.

The bank has classified three borrower accounts in the gems and jewellery sector with fund-based outstanding of Rs 794.87 crore as fraud and non-performing. In 2016, RBI governor Raghuram Rajan had reportedly questioned ICICI Bank's loan disbursement to Videocon, but since then there has been nothing as there has been no material investigation by the RBI in the matter, which by itself is shocking.

The bank has also made provision for certain other fraud and non-performing cases by debiting reserves and surplus amounting to Rs 19.98 crore. It was however marginally lower than a Bloomberg brokers' consensus estimate of Rs 1,061crore.

Even as Kochhar made clear that the issue was not raised at the board meeting to approve financial results, the government nominee on the board, Lok Ranjan, a joint secretary in the Department of Financial Services, was "not able to attend the board meeting".

Its total income fell to Rs 72,386 crore as against Rs 73,661 crore crore in 2016-17. The board will meet again on Tuesday, although little is expected to be discussed on the controversy with Kochhar saying that it was a routine meeting, conducted every year after the announcement of annual results, to finalize planning and budget.

Domestic loans were up 15 percent year-on-year at the end of March, and Kochhar said the aim would be to increase the overall domestic loan book by 15 percent a year, with retail loans growing at above 20 percent until March 2020.

MUMBAI: ICICI Bank said that it plans to deploy a "preserve, change and grow" strategy to get back to the growth trajectory. "We have satisfactorily replied to all the questions of the regulators which is an on-going process for a regulated entity like a bank and the regulator of government departments", ICICI Bank chairman MK Sharma had said during a media interaction last week.

The issue of compromise of corporate governance came to the fore when investor and whistleblower Arvind Gupta racked up the issue in the March.He alleged quid pro quo between Videocon Group and ICICI Bank's chief executive officer (CEO) as well as her family members with respect to extending a loan worth Rs 3,250 crore.

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