Altering its stance on an enquiry into the conduct of ICICI Bank managing director and chief executive officer Chanda Kochhar with regard to loans given to the Videocon Group, the board of the lender said on Wednesday it would initiate an independent probe into the matter. However, the board’s statement did not mention whether Kochhar would proceed on leave during the period of the enquiry. A whistle-blower has alleged Kochhar may have violated the bank’s code of conduct and provisions relating to conflict of interest while disbursing loans to the Videocon Group. The conflict may have arisen because of financial transactions between the Videocon Group and Deepak Kochhar, husband of Chanda Kochhar.
In March, the board, headed by MK Sharma, had reposed faith in Kochhar saying it had found ICICI Bank’s internal processes that approved loans robust. In a strong endorsement of its CEO, the board ruled out scope for any favouritism, nepotism or a quid pro quo. In 2008, Venugopal Dhoot had set up a company with Deepak Kochhar, called NuPower Renewables. Subsequently, he is understood to have given a loan of Rs64 crore to this company before he transferred its ownership to a trust headed by Deepak Kochhar for just Rs 9 lakh. In 2012, ICICI Bank had given a loan of Rs 3,250 crore to the Videocon Group for the group’s oil and gas-related capital expenditure requirements. This was as part of a consortium loan in which 20 banks participated and ICICI Bank’s share is less than10% of the total credit.
The transfer of the ownership of NuPower Renewables is understood to have happened around six months after the Videocon Group received the Rs 3,250-crore loan.
ICICI Bank has clarified the terms and conditions offered for these loans were similar to those offered by the other banks, ruling out the possibility of any special benefit by ICICI Bank to the borrower. In March, Sharma said Chanda Kochhar had made all necessary disclosures while sitting on the credit committee that sanctioned loans to the Videocon Group in 2012. Sharma noted that the board did not see her being on the credit committee as a conflict of interest in any manner since the Videocon Group was no longer an investor in NuPower Renewables.
“The scope of enquiry would be comprehensive and include all relevant matters arising out of and in the course of examination of the facts and wherever warranted, use of forensics, email reviews and recordal of statements of relevant personnel, etc,” ICICI Bank said in a stock exchange notification on Wednesday. It also said its board has asked the audit committee to assist in the appointment of an independent and credible person as the head of the enquiry, determining the terms of reference of the enquiry, the period that will be covered by the enquiry, etc. The audit committee will also make arrangement to assist the head of enquiry with legal and other professional support as may be required.