Contrary to expectations, ICICI Bank board meet skips loan controversy surrounding CEO Chanda Kochhar

Mumbai: Despite many allegations of conflicts of interest being faced by managing director and chief executive Chanda Kochhar, the ICICI Bank board did not discuss the controversy today. “Today, there was no discussion at all on this issue. The board has already clarified its stance,” Kochhar said, when asked whether the controversial lending to the Videocon Group was discussed at the board meeting. Asked about the silence maintained by her as well as the bank as more details get reported about the alleged misdoings, Kochhar referred to the 28 March statement from the board which stood firmly behind her. “The board has made its stance very clear and we do not have anything more to add,” Kochhar, who was speaking after the announcement of the bank’s full-year results, said. “(We are) talking of Q4 results now and we should focus on that. And I think the board has already clarified,” she added. The bank on Monday reported a 50 percent plunge in standalone net at Rs 1,020 crore for the march quarter as provsions jumped threefold. [caption id=“attachment_4378535” align=“alignleft” width=“385”] ICICI Bank CEO Chanda Kochhar. Reuters.[/caption] It can be noted that the ICICI Bank board had come out with a statement supporting Kochhar on the eve of the news getting out in the media. This was followed by a slew of reports of more alleged wrongdoings and also of there being a division within the board as well. Kochhar today confirmed that government nominee Lok Ranjan, a joint secretary in the department of financial services, was not able to attend the board meeting. She also termed the board meeting scheduled for tomorrow as a “routine” affair, where the top decision-making body will decide on its strategy and targets for the fiscal. When asked about the dent to the brand and changes in workings after the controversy, Kochhar pointed out to the growth in deposits, which rose 14 percent in FY18. “As you see, deposits speak for itself. I think we have a very strong deposit franchise, technology franchise and that continues to remain strong,” she said. There are series of allegations of impropriety in ICICI Bank extending loans to some companies and enjoying reciprocal benefits. It is alleged that family members Kochhar, including her husband Deepak Kochhar, got financial favours from the borrowers against the loans sanctioned by the bank. The issue is being investigated by multiple agencies including a filing of a priliminary enquiry by the CBI, and probes by the Income Tax Department and the ED. Former Sebi chief M Damodaran had said one option for Kochhar was to step down till the investigation was over. The issue of compromising corporate governance practices came to the fore when investor and whistleblower Arvind Gupta raked up the issue in March. He also alleged quid pro quo between Videocon Group and Kochhar as well as her family members with respect to extending a loan worth Rs 3,250 crore, which for the past many years have been NPA. It was alleged that Videocon Group pumped money into NuPower Renewables, a firm owned by Deepak Kochhar, the husband of Chanda. There are also allegations that NuPower got Rs 325 crore investment from Mauritius-based Firstland Holdings, a company owned by Nishant Kanodia, the 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 domestic banks that extended a $530 million to Essar Steel Minnesota on 29 December, 2010. This loan too was later classified as bad loans. 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. Also, there was no clarity over the alleged Rs 64-crore loan (unsecured fully convertible debentures) given to NuPower by Supreme Energy, which was 99.99 percent owned by Videocon group chief Venugopal Dhoot at that time. While Chanda Kochhar sat on the credit committee that approved the loan to Videocon, there are allegations of conflicts of interest in her husband’s Singapore-based brother Rajiv Kochhar, performing debt-restructuring work on errant corporate borrowers from ICICI, including Videocon. The restructuring wasn’t commissioned by the bank but by the borrowers. Interestingly, the bank board expressed full faith in Kochhar, whose current tenure as CEO is ending 31 March, 2019. It had reviewed credit approval processes and found them to be robust, according to a 28 March filing by the bank.