A whistleblower has accused India's ICICI Bank of issuing hundreds of letters of credit (L/Cs) to entities related to its troubled corporate borrowers to help them avoid defaulting on their loans according to local media reports.

The bank is also alleged to have sanctioned a large number of term loans to some of the same borrowers.

Anonymous employee

According to the complaint received earlier this year by the Reserve Bank of India (RBI) from an anonymous ICICI Bank employee, the private sector lender granted credit facilities despite warnings raised by internal auditors.

The complainant named Essar Global, Bhushan Steel, NCML Industries, Bhatia Global, Bhushan Energy, Essar Steel and Tecpro Systems amongst the 31 companies the bank should not have extended credit too.

L/C round-tripping

The complaint also contains allegations that ICICI Bank issued L/Cs against fictitious bills of lading to service a number of loans.

If these allegations of round-tripping are proven, the bank will be in violation of anti-money regulations.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.