Also, the RBI recommended to ICICI Bank that it classify its loan to Essar Steel Minnesota as a “sub-standard asset”. Records reveal that funds loaned to Essar Steel Mauritius were allegedly used to make payments to Essar Projects (see chart), for invoices raised by it against Essar Steel Minnesota. Subsequently, Essar Projects transferred these funds to Essar Global Fund Ltd, promoter of Essar Steel Minnesota, which finally used it to service its debt obligation to ICICI Bank. Between 2012 and 2014, ICICI Bank also condoned repeated alleged breach of loan covenants by Essar Steel Minnesota, records show. The proposal document for the loan to Essar Steel Mauritius did not refer to most of the red flags.

Source: Indian Express May 01, 2019 23:31 UTC