A panel headed by former Supreme Court judge BN Srikrishna has found that former chief executive of ICICI Bank Chanda Kochhar had violated the bank's code of conduct and internal policies.
Kochhar, who worked at India’s third-biggest lender for over three decades, rose through the ranks to become one of the most influential women bankers in the country before she took an early retirement last year amid allegations of loans for favours and conflict of interest.
The bank had earlier dismissed allegations against Kochhar after an earlier investigation in 2016. In March last year, the bank backed Kochhar, saying there was no issue of conflict of interest.
But the new enquiry into Kochhar’s conduct between April 2009 and March 2018 found that she was in “violation of the ICICI Bank Code of Conduct, its framework for dealing with conflict of interest and fiduciary duties,” the board said in the statement.
The report also found that Kochhar had failed to meet requirements with respect to annual disclosures required by ICICI Bank and found that her actions rendered bank’s processes ineffective, the board also said.
Last week, the Central Bureau of Investigation (CBI) filed a case of criminal conspiracy and fraud against Kochhar, her husband Deepak Kochhar and the managing director of Videocon Industries Ltd
Here is all you need to know about the ICICI Bank loan controversy:
The CBI had alleged that after Kochhar took over the reins of the ICICI Bank, six loans worth Rs 1,875 crore were sanctioned to Videocon Group and companies associated with it which turned non-performing assets (NPAs) and caused a loss of over Rs 1,700 crore to the bank. As per media reports, the ICICI Bank's total loan exposure to the Videocon Group was Rs 3,250 crore.
It also alleged that Dhoot allegedly invested Rs 64 crore in NuPower Renewables, a company founded by Deepak Kochhar.
The CBI suspected that investments were camouflaged through changes in the ownership of NuPower Renewables, and were quid pro quo for the loans sanctioned during the tenure of Kochhar.
Banking doyen and Chairman of New Development Bank KV Kamath, Goldman Sachs India chairman Sonjoy Chatterjee, Standard Chartered Bank CEO Zarin Daruwala, Tata Capital head Rajiv Sabharwal and Tata Capital senior advisor Homi Khusrokhan need to be investigated, the FIR had said, as they were part of ICICI committees that sanctioned the loans to the Videocon group.
Their names were included by the agency in the text of the FIR after a year-long preliminary enquiry.
Chanda Kochhar's resignation
In October last year, facing enquiry over charges of nepotism and conflict of interest, Kochhar quit the bank, six months before her tenure was to end.
Kochhar also resigned from all subsidiaries of the bank including ICICI Securities where she had sought reappointment as the chairperson.
Kochhar's five-year tenure as CEO was to end on 31 March, 2019.
Was unaware of Videocon's dealings with husband: Chanda Kochhar
In September 2018, Kochhar had told the Securities and Exchange Board of India (SEBI) that she was unaware of the business dealings between her husband, Deepak, the promoter of NuPower Renewables, and Videocon group promoter Venugopal Dhoot.
Responding to a SEBI show-cause notice, Kochhar denied the charges levelled against her by the markets watchdog.
Videocon loan row
It was alleged that Videocon Group pumped money into NuPower Renewables, a firm owned by Deepak Kochhar.
There are also allegations that NuPower got investments of Rs 325 crore from Mauritius-based Firstland Holdings, a company owned by Nishant Kanodia, son-in-law of Essar Group co-founder Ravi Ruia.
The investments from Ruia's son-in-law's firm into NuPower started in December 2010. Incidentally, the same month ICICI Bank was the lead banker in a consortium of Indian banks that extended a $530 million loan to Essar Steel Minnesota LLC on 29 December, 2010. This loan was later classified as NPA.
The Reserve Bank in its 2016 investigation in the matter had raised questions over the ownership of the Mauritius-based entity, First Land Holding, which had invested Rs 325 crore in NuPower.
SEBI's enquiry into ICICI Bank loan row
In March 2018, market regulator SEBI began looking into the matter for any possible disclosure and corporate governance-related lapses.
The markets watchdog began a preliminary enquiry into various disclosures made by the top private sector bank over the last few years.
In December last year, SEBI said the case involving ICICI Bank and Chanda Kochhar for alleged regulatory lapses was pending before the adjudicating officer.
ICICI Bank's earlier stance
In March 2018, when some media reports mentioned the alleged involvement of Kochhar and her family members in a loan provided to Videocon group on a quid pro quo basis, ICICI Bank's board reposed full faith in Kochhar.
"I would like to clearly state that we always satisfactorily reply to questions of regulators," ICICI Bank Chairman MK Sharma had said in March last year but did not specifically name any regulator.
Sharma had also said that ICICI Bank was not the lead bank for this consortium and the bank only sanctioned its share of facilities aggregating approximately Rs 3,250 crore which was less than 10 percent of the total consortium facility in April 2012.
With inputs from agencies
To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day.
To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.
Updated Date: Jan 31, 2019 14:03:23 IST