The board of ICICI, India’s largest private bank, has said it has full faith in its CEO and managing director Chanda Kochhar, despite claims of favoritism and conflict of interest in granting loans to a company with a poor repayment record.
The Indian Express has revealed that Venugopal Dhoot of Videocon Group set up a company in December 2008 with Deepak Kochhar, husband of Chanda Kochhar, and two of her relatives. Dhoot then gave a 640-million-rupee (US$9.8 million) loan to the company via a fully-owned entity before transferring ownership to a trust headed by Deepak Kochhar for just Rs 900,000 ($13,806).
The daily said the transfer of the company to Deepak Kochchar came six months after Videocon Group got a loan of Rs 32.5 billion ($498 million) from ICICI. Almost 86% of that loan (Rs 28 billion or $431 million) remains unpaid and the Videocon account was declared a non-performing asset (NPA) last year.
ICICI Bank’s board gave details of its loans to Videocon and said that in 2012 a consortium of 20 banks and financial institutions sanctioned a debt-consolidation program for the group, and its oil and gas capital-expenditure plan amounting to about Rs 400 billion ($6 billion). The share that ICICI sanctioned was about Rs 32.5 billion ($498.5 million), which was less than 10% of the consortium’s total facility in April 2012.
The board assured that there were adequate checks and balances in the bank’s loan appraisal, rating and approval processes and that no individual employee, irrespective of his or her position, had the ability to influence credit decisions at ICICI Bank.
It said the credit committee that sanctioned the loan was chaired by then ICICI chairman KV Kamath and included independent and working directors. The board said Chanda Kochhar was not the chair of this committee.
Videocon Group was among top defaulters in a list released by India’s central bank, which called on banks to approach the National Company Law Tribunal to initiate insolvency proceedings.