The former chief executive officer of ICICI Bank, Chanda Kochhar, and her husband Deepak Kochhar, have been named as suspects in a criminal case lodged by India’s premier investigation agency.
Charges lodged by the Central Bureau of Investigation (CBI) in the Videocon loan default case raises questions about endorsement of Kochhar by the bank’s board and internal inquiries it conducted into Kochhar’s activities.
ICICI Bank is India’s third-largest lender by assets and second largest private bank in the country.
The CBI lodged a first information report (FIR) that said the couple and a group of companies run by Deepak Kochhar were involved in an alleged conflict of interest in extending a loan of 32.5 billion rupees (US$457.3 million) loan to Videocon International Electronics Ltd, whose chairman and managing director Venugopal Dhoot has also been named. The 32.5 billion rupee credit amount was part of a total loan of 400 billion rupees sanctioned to the Videocon group by a 20-bank consortium.
The CBI also named current and former heads of the ICICI Bank including KV Kamath, Sandeep Bakhshi, NS Kannan, Zarin Daruwala, Rajiv Sabharwal, Sonjoy Chatterjee and Homi Khusrokhan. It alleged that these people were part of the various credit committees of ICICI Bank that sanctioned loans to the Videocon group, in violation of the bank’s credit policy.
‘Conflict of interest’
In December 2008, Dhoot had set up a company NuPower Renewable Ltd with Deepak Kochhar and two of his relatives and then gave a loan of 640 million rupees ($9 million) to this company through a fully owned entity. The businessman later transferred his ownership to a trust headed by Deepak Kochhar for 900,000 rupees ($12,663). The transfer of ownership reportedly happened six months after the Videocon Group got the loan from ICICI Bank. The Videocon account was in 2017 declared a non-performing asset by the bank.
The CBI FIR notes that Chanda Kochhar was one of the members of the sanctioning committee that disbursed loans to Videocon. While the loan was sanctioned on September 7, 2009, the next day Dhoot transferred a sum of 640 million rupees to NuPower. The agency alleged that Chanda Kochhar got illegal benefit via her husband from Dhoot.
When the allegations first surfaced in March 2018 the ICICI bank board gave Chanda Kochhar a clean chit, denying any nepotism or conflict of interest and voiced faith in her.
However, investigators took a different view. The CBI has charged Chanda Kochhar, her husband and Dhoot with an offense and registered a criminal case.
The bank had claimed there are adequate checks and balances in loan appraisal, rating and approval processes and no individual employee, irrespective of the position he or she holds, has the ability to influence the bank’s credit decision at the bank.
But the CIB alleged that various sanctioning committees of ICICI Bank cleared loans to Videocon Group companies to enable them to repay the unsecured loan availed from VIL. Further, a loan was sanctioned to VIL to refinance the company’s existing loans. The agency claimed these loans were sanctioned in violation of credit policy of the time.
Chanda Kochhar resigned in October and was replaced by Sandeep Bakhshi, the former head of ICICI’s life insurance arm. The bank’s net profit for the three months to September 30 nearly halved to 9.09 billion rupees ($124 million), compared with 20.58 billion rupees a year earlier.