ICICI BANK CHANDA KOCHHAR CASE
Kochhar impact on ICICI
Kochhar is credited for consolidating the operations of the bank after the departure of K V
Kamath. The bank, with roots in development finance, has also seen a massive rise in its sour
assets, courtesy mainly on exposure to the infrastructure sector, along with its peers, which led
to a massive drop in profit in recent quarters.
What’s the issue?
Kochhar and her family members facing allegations of quid pro quo and conflict of interest
with respect to a loan extended to certain entities, including the Videocon group. Multiple
agencies, including the CBI and regulator Sebi, are already probing the alleged lapses involving
Kochhar and her family members. “Kochhar has decided to go on leave till completion of the
enquiry as announced on May 30. The board has noted and accepted this. During her period of
leave, the COO will report to the board,” the statement said. The current tenure of Kochhar,
who has been at the helm since 2009 and has been on “annual leave” for some time now, ends
next March.
Complicated Controversy
Kochhar, a career ICICI Group employee has been under the cloud since late March, when
allegations of conflicts of interest and possible quid pro quo in lending to Videocon group,
along with lack of disclosures by the bank, made headlines.
Following reports of allegations based on an activist’s complaint, the bank board earlier had
come out strongly in support of her. Complicating the matters for her, the bank received another
complaint against Kochhar by an internal whistle-blower, who made allegations of not
following the bank’s code of conduct, late May.
This led the board to announce a detailed probe by an external expert into the allegations.
Retired Supreme Court judge B N Srikrishna would be heading the probe panel. According to
sources, he has accepted the request from the bank and the terms of reference for the panel are
to be decided by the audit and governance committee of the bank.
While the contents of the whistle-blower’s complaint are not known, the first set of allegations
against Kochhar pertains to alleged impropriety while lending to the cash-strapped Videocon
Group and companies associated with the Ruia family, the promoters of beleaguered Essar
Group. However, the statement from the bank did not have any mention of it.
The cases under scanner include the bank extending Rs 3,250 crore to Videocon Group in 2012
and the involvement of Chanda Kochhar’s family members, including her husband Deepak
Kochhar, in first sanctioning the loan and then restructuring the same through Avista Advisory,
a company run by his younger brother Rajiv Kochhar.
There are also allegations that NuPower — a company floated by Videocon group and Deepak
— got investments of Rs 325 crore from the Mauritius-based Firstland Holdings, a firm owned
by Nishant Kanodia, the son-in-law of Essar Group co-founder Ravi Ruia.
TIMELINE:
October 2016: The issue of alleged irregularities in loans comes into the light, after a
shareholder whistleblower Arvind Gupta, an investor in both ICICI Bank and Videocon
Group, raised concerns through a blog.
Gupta alleges that Chanda Kochhar influenced an Rs 3,250-crore loan to the
Venugopal Dhoot-led Videocon group in 2012 in return for a deal in NuPower Renewables
and Supreme Energy, a clean-energy firm run by her husband Deepak Kochhar.
Gupta writes to the Prime Minister, the RBI Governor and several other authorities
demanding a probe. His complaint, however, gathers no attention.
March 2018: The case again comes in spotlight when another unnamed whistleblower
complains against the bank and its top management, including Kochhar, alleging a deliberate
delay in recognising impairment in 31 loan accounts between 2008 and 2016 to save on
provisioning costs.
These allegations lead to probes by multiple agencies, including the CBI, ED and SFIO, and
also questioning of Kochhar family members.
March 28, 2018: The bank states that it has reviewed internal processes for credit approval
and 'found them to be robust'. The statement points out that the decision to lend to Videocon
Group was taken at the consortium level. Even though Kochhar was part of the lending
committee that approved the loan, she did not have any personal stake in it.
The bank's board also expresses full faith in Kochhar, denying any wrongdoing on her part
and ruling out any 'conflict of interest'.
March 31, 2018: The Central Bureau of Investigation (CBI) files an initial inquiry. The
investigative agency later also questions Deepak Kochhar and his brother Rajiv Kochhar.
April 3, 2018: Coming to the defence of its CEO Chanda Kochhar, then ICICI Bank and
rules out any quid pro quo as alleged with regard to the loan given to Videocon group.
"The board has come to the conclusion that there is no question of any quid pro
quo/nepotism/conflict of interest as is being alleged in various rumours," he tells reporters.
April 4, 2018: The Serious Fraud Investigation Office (SFIO) seeks the Ministry of
Corporate Affairs' nod to probe ICICI Bank's Rs 3,250 crore loan to the Videocon group in
2012.
May 23, 2018: The Securities and Exchange Board of India (SEBI) serves a notice to ICICI
Bank's CEO and MD Chanda Kochhar on dealings of the lender with Videocon Group and
NuPower Renewables, an entity promoted by her spouse Deepak Kochhar.
The market regulator asks Kochhar and the bank to submit their responses till June 7 in
relation to a 12-page show cause notice it served to ICICI Bank and Kochhar on May 23.
May 30, 2018: The ICICI Bank board starts an independent probe.
June 2018: The bank appoints retired Supreme Court judge Justice BN Srikrishna to head the
independent panel initiated by ICICI Bank’s board.
June 8, 2018: ICICI Bank and Chanda Kochhar seek more time to respond to the show cause
notice served by markets regulator SEBI.
July 5, 2018: SEBI asks Kochhar to reply to the show cause notice over alleged violation 0f
listing disclosure norms by July 10. Kochhar and the bank had missed the June 7
deadline and sought more time to respond to the notice due to lack of documentary proof that
support the allegations.
October 4, 2018: The ICICI Bank board accepts Chanda Kochhar's request to seek early
retirement. The bank says that the enquiry instituted by the board will remain unaffected and
certain benefits will be subject to the outcome of the enquiry.
January 24, 2019: The CBI registers an FIR against Chanda Kochhar, her husband Deepak
Kochhar and Videocon group MD Venugopal Dhoot over alleged irregularities in loans
sanctioned by the bank to the group in 2012.
January 30, 2019: Following the report, the bank's board says it will treat her separation as
'termination for cause' under their internal policies.
ANALYSIS:
Chanda Kochhar, the managing director and chief executive officer of ICICI Bank, is at the
center of a scandal that broke out after a whistle-blower alleged that the bank sanctioned loans
to Videocon because its chairman Venugopal Dhoot had dealings with NuPower, a company
founded by Kochhar’s husband, Deepak Kochhar. The Videocon loan later turned into a non-
performing asset. Nearly 86 per cent of the loan remains unpaid.
The Income Tax Department has issued a notice to Deepak Kochhar, husband of ICICI Bank
MD and CEO Chanda Kochhar, in connection with its tax evasion probe in the Videocon bank
loan case. They said the notice has been issued to Deepak Kochhar under section 131 (power
regarding discovery, production of evidence) of the I-T Act and he has been asked to furnish
details of his personal finances, Income Tax Returns (ITRs) for the last few years and business
transactions with the firm NuPower Renewables.
Media reports have suggested that Videocon’s promoter Venugopal Dhoot was one of the first
investors in a renewables company promoted by Ms. Kochhar’s husband Deepak Kochhar
called NuPower Renewables in 2008. He subsequently sold his stake but companies controlled
by him or associates close to him maintained a relationship with NuPower Renewables till early
2013 when its control was finally transferred to a trust controlled by Deepak Kochhar.
In January 2009 just after buying a stake in NuPower, Dhoot transferred his shares to Deepak
Kochhar for Rs 2.5 lakh and resigned as director. But the association with the Dhoot family
did not end there. In March 2010, NuPower got a loan of Rs 64 crore by a company named
Supreme Energy, entirely owned by Mr. Dhoot. At the end of the same month, Supreme Energy
became a 94.99 percent shareholder in NuPower. The remaining shares were held by Mr.
Kochhar. In November 2010, Dhoot transferred his entire stake in Supreme Energy to associate
Mahesh Chandra Punglia. From September 2012 to April 2013, Punglia transferred his holding
to Pinnacle Energy, a trust, where Deepak Kochhar was the managing trustee.
Few notices have been sent to the people associated with the firm. In a related development,
Deepak Kochhar will be called for questioning soon.
ICICI has denied any wrongdoing on its part and that of Chanda Kochhar. In a statement the
bank denied any conflict of interest and said that Videocon is not an investor in NuPower and
that the renewables firm did not have a banking arrangement with ICICI.
The ICICI Bank board came out in support of Chanda Kochhar, saying it has full faith and
confidence in her and described reports to Videocon group as “malicious and unfounded
rumors”.
