THE INSTITUTE of Chartered Accountants of India (ICAI) has raised questions about ICICI Bank’s home loans business and has sought a fresh central bank audit of a two-year-old sale deal of dud loans, after a Mumbai-based chartered accountant spotted irregularities in some loans.“The regulator should re-audit assets sold to ARCIL,” ICAI president Uttam Prakash Agarwal told to a leading newspaper, referring to the sale of bad home loan assets worth over Rs 10,000 crore by the bank to the asset reconstruction company.
ICICI Bank is accused of lending money for the purchase of some apartments in a housing project in a Mumbai suburb, and in some cases twice for the same set of apartments. According to the chartered accountant who spotted irregularities, the bank disbursed home loans for the purchase of 15 apartments in the Ritu Paradise Project developed by S R Developers in Mumbai’s Mira Road. Documents available with ICAI and in SundayET’s possession show that double loans were issued by the Bank on some flats.
These loans were part of the block of bad loans sold to ARCIL, which helps banks to free up capital by buying such loans and seeks to recover them. Although the loan amount for these 15 flats were only in the region of only Rs 2-3 crore, the accounting regulator is of the view that the bank bears responsibility for selling off these bad loans to ARCIL without verifying it.
A spokesman for ICICI Bank admitted that such an incident had taken place. “When this asset was sold to ARCIL, this was not identified as fraud. The builder fraudulently recreated the entire documentation and sought finance. Such frauds are a challenge to the industry,” he said. On the issue of loans being issued twice for the same property, the ICICI spokesman said: “Since there is no central database, it is almost impossible to track whether any loan has already been given against a specific property.”
But ICAI said this episode exposed holes in the bank’s systems. “In four cases, double loans were issued by ICICI Bank itself. This shows the inability of the bank’s IT set up and its due diligence mechanism,” Mr Agarwal said.
RBI should appoint auditors
HE added that the appointment of auditors in private sector banks should also be done by RBI as in the case of public sector banks. “No autonomy should be given to the management of the private sector banks. In the past too, there were accounting issues and the recent example is the fall of Global Trust Bank”, he said.
hi, go to www. savepublic.com to know more about arcil and icici fraud for inappropriately handling NPAs and making home loan and other loan takers suffer. Share the site further to let other aggrived people and regulatory authorities know the hidden truths….
i bought house with my wife as joint partner in loan.i want know how rebate we can get jointly.
ICAI Clarification :
The Institute of Chartered Accountants of India
[Set up by an Act of Parliament]
ICAI Bhawan, P.B. No. 7100, Indraprastha Marg, New Delhi – 110 002.
Phone: Direct +91 11 3011 0402, Fax. +91 11 3011 0581;
Email:[email protected]; Website: http://www.icai.org
13th September, 2009
The Editor
The Economics Times
Times House
7, Bahadur Shah Zafar Marg
New Delhi – 110002
Dear Sir,
This has reference to the lead news item entitled “ICICI Bank’s Rs. 10K-cr bad loans
under lens“ by Mr Anand Rawani published in your esteemed newspaper datelined
13th September, 2009.
In regard to the said news item, we wish to bring to your kind notice that the quote
cited in the said news item in the second para, reportedly made by ICAI President
CA. Uttam Prakash Agarwal and thereafter the reference made to “sale of bad home
loan assets worth over Rs. 10,000 crores” are totally incorrect, wrong and
completely baseless and as such the same is denied. We also would like to clarify
that ICAI has not asked for any central bank audit of assets sold to ARCIL. We
completely deny this statement attributed to us as well.
You are therefore requested to kindly take required corrective measures immediately
and publish the facts of the matter prominently in your daily under intimation to us.
For the purpose of setting the records right, we may mention that the fact of the
mater has been that when few Mumbai-based chartered accountants approached
the ICAI President CA. Uttam Prakash Agarwal regarding the harassment being
meted out to them, despite they being genuine buyers of the flats in the society
referred to the news item, the latter had advised them to take up the matter with
the authorities in the Bank at their individual level. He had also assured them that if
their plea is genuine and on getting the feedback from them about the authorities’
response, he would take up the matter with the Bank and its regulator at the top
level, if need be.
Yours faithfully,
(T. Karthikeyan)
Secretary
Hi,
There are reports about the discovery of fraudulent loans among a portfolio sold by ICICI.
Here are the facts of the case:
Facts and mis-statements in the home loans case and ICICI Bank’s response to Economic Times story dated September 13, 2009
1.The bank sold home loan assets to the Asset Reconstruction Company of India Limited (ARCIL).
2.At the time of the sale of the portfolio to Arcil, neither party was aware of the nature of specific loans. The value of the total loan liabilities sold was less than Rs. 1,500 crores – less than 2.5% of ICICI Bank’s loan portfolio – and not Rs. 10,000 crores as claimed in some sections of the press.
3.In 5 loan accounts amounting to less that Rs 1 crore, the borrowers had obtained loans on the basis of forged documents. This fraud was detected by the bank itself as part of its regular monitoring. A Police complaint had been filed and fraud had been reported to RBI.
4.The modus operandi in each such case appears to have been as follows: Genuine home buyer applies for a loan and gets it sanctioned. Subsequently, a second party, with the intention to commit fraud, applies for a loan after forging papers referring to the same property, gets it sanctioned and then defaults on the loan.
5.Of course, all such forged applications by borrowers are completely contrary to the terms and conditions of our loans and are criminal acts, subject to prosecution.
6.Further, it has been claimed by some sections of the press that the Institute of Chartered Accountants of India (ICAI) has asked Central Bank to audit sale of assets to ARCIL. This is an entirely false and mischievous statement.
7.ICAI has clarified that the statements attributed to it are totally incorrect wrong and completely baseless and as such the same is denied. ICAI has also stated through their statement on its website (http://www.icai.org) and through its clarification issued to The Economic Times.
8.ICICI Bank intends to investigate the source of these deliberate and malicious statements and take strict action against those who seek to defame its reputation.
9.The article seeks to magnify a minor fraud into a major issue through inclusion of incorrect and irrelevant data, and statements of experts which have subsequently been denied.
10.For more information and an update on this issue, please write to [email protected].
Regards,
ICICI Customer Service Team