HC to ICICI Bk: Derivatives loss not NPA

The Hyderabad High Court yesterday said that the ICICI Bank cannot treat as non-performing assets the amount of money Hyderabad-based NCS Sugars owes the bank on account of losses on foreign exchange derivatives.

However, the court did not restrain the ICICI Bank from proceeding against NCS Sugars on other issues.

The next hearing of the case NCS and ICICI Bank, which are locked in a legal dispute over losses incurred by the former on derivatives products, is scheduled for next week. When contacted, NCS Sugars executives declined to comment.

Earlier in the day, Chanda Kochar, joint MD and CFO, ICICI Bank, told reporters, on the sidelines of a conference organised by Indian Merchants Chamber, that many of the bank's clients are working out alternative plans to deal with the situation, one of them being out of court settlements.

Another option, Kochar said, is the use of other financial instruments to contain the damage resulting from the change in the interest rate environment or a change in the value of the dollar against currencies such as the Swiss franc and the yen.

About 10 companies have filed cases relating to derivatives contracts against their bankers so far.

These include Rajshree Sugars, Nahar Industrials, Garg Acrylyte, Sundaram Brake Linings, Sabare International, Precot Meridian and Sundaram Multi-Pap. The banks involved include ICICI Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank.