ICICI Rules Out Conflict of Interest on the part of CEO Chanda Kochhar For Okaying Loan To Her Husband’s Company

MUMBAI based ICICI Bank, India’s second topmost private banker, has rubbished  reports of any wrongdoing in sanctioning loan to debt ridden Videocon by  its CEO Chanda Kochhar. She is accused of conflict of interest after her husband Deepak Kochhar’s company had received quid pro quo benefits from loans extended by the bank to the Videocon group. The bank says it has followed the prescribed rules Chairman MK Sharma on Thursday revealed that the bank’s Managing Director and CEO Chanda Kochhar was part of the committee that approved loans to the Videocon group, but denied any quid pro quo on the latter’s part. Addressing a press conference, the second one by the bank in Kochhar’s defence, Sharma denied any conflict of interest. MK Sharma said large loans are approved by board’s credit committee and Kochhar was not head of the committee .The “Terms and conditions of the loan were similar to those offered by other banks in the consortium which constitute 90 per cent of the consortium.  ICICI Bank on Thursday issued a clarification after the Reserve Bank of India (RBI) imposed penalty on it earlier during day. RBI has imposed monetary penalty worth INR 58.9 crore on ICICI Bank for failing to abide by rules on the sale of bonds in the held-to-maturity.RBI said that it has imposed a penalty on ICICI Bank Limited for “non-compliance with directions issued by RBI on direct sale of securities from its HTM portfolio (long term investment savings) and specified disclosure in this regard”. In a statement, ICICI Bank said it gives utmost importance to regulatory compliance and ensuring compliance with all directives, guidelines and observations by RBI. The country’s central bank has imposed the penalty on the Bank for continued sale of government securities classified as HTM.

“ICICI Bank had continued with the sales from HTM category for a few weeks during the quarter ended March 31, 2017, due to a genuine misunderstanding on the timing of the applicability of RBI’s direction in this matter,” said the ICICI .It added that as per RBI guidelines, the Bank had disclosed in its annual report for FY2017 that it had sold more than 5 percent of investments categorised as HTM.”However, the Bank had not made the specified additional disclosure at that time. The Bank has subsequently been making the specified disclosure as directed by RBI in the audited financial results since the quarter ended June 30, 2017,” said ICICI in the statement. During the current year Financial Year, the Bank has sold less than 5 per cent of securities from its HTM portfolio, said the ICICI Bank. The Bank added that it will continue to give utmost importance to regulatory compliance and endeavours to meet supervisory expectations. ICICI Bank was not the lead bank for this consortium and that it Okayed close to INR 3,250 crore based on Credit Committee approval of which Kochhar was not a part. ICICI Bank’s share of the banking sector’s exposure to Videocon group was less than 10 percent. Kochhar has been making all her disclosures to the company under the required law, Sharma added.(image courtesy to Wikipedia). Videocon group chairman Venugopal Dhoot said that his investment in Supreme Industries – the company alleged to have invested in Deepak Kocchar-promoted NuPower Renewables was only in thousands of rupees and temporary. He denied that any Videocon group company had funded NuPower when he was an investor in Supreme. The allegations of a quid pro quo investment first cropped up in 2016 when a whistle blowing shareholder raised it. The bank had at that time defended itself saying that the decisions were taken by a credit committee and that Kochhar had not headed the committee.

Leave a Reply

Your email address will not be published. Required fields are marked *