A board meeting by ICICI bank has reposed full faith in Chanda Kochhar, the CEO and MD of the bank and concluded that there was no question on favouritism, nepotism or quid-pro-quo on the part of Kochhar while disbursing loans to the Venugopal Dhoot headed Videocon Group.
The board was replying to a two old year old case involving an investor who alleged dubious transaction on the part of Kochhar. The board called a detailed report from Dr. Arvind Gupta, an investor in the bank as "malicious and unfounded rumour". The report that Gupta wrote to the Prime Minister's Office and CCed (Carbon Copy) to the Finance ministry, Serious Fraud Investigation Office, Raghuram Rajan (RBI), Securities Exchange Board of India and other departments was also sent to the board of ICICI bank.
The board replied, "there have been some malicious and unfounded ruours in the past few days casting insinuations on ICICI Bank Ltd and its MD & CEO. Similar rumours had first surfaced in mid-2016 and had been appropriately responded to. Nevertheless these have surfaced in the recent past to malign the bank."
Gupta in his complaint in 2016 highlighted a nexus between the Dhoots and Kochhars. In his blog, available here, he alleged that Deepak Kochhar received kick-backs in the form of investments from Videocon Group. The full size of investment from Videocon in Deepak Kochhar's company- NuPower Renewables is still being calculated, but ICICI bank disbursed loans estimated at Rs 3250 crores.
On his blog, Gupta alleges that between December 2010 and March 2012, NuPower Renewables received large overseas funding’s aggregating to Rs 325 crore in the form of compulsorily convertible preference shares (CCPS) from an obscure Mauritius based entity named Firstland Holdings Limited.
Various reports on Wednesday suggested that Deepak Kochhar, who holds a degree in Finance from the Jamnalal Bajaj Institute of Management Studies, may have received a 1% commission for loans of Rs 3250 crores.
The board in reply to the above allegations said that the bank's credit approval process was well-structured and involved multiple departments. There was no individual employee irrespective of position in the organisation to influence the credit decision of the bank.
"The chairman of the credit committee, til as late as June 2015, was awlays a non-Exexutive Director. Based on the above, it can be concluded that there are adeqate checks and balances in loan appraisal, rating and approval processes within the bank, both from the control as well as from a governance perspective," said the board.
In its report, the board added that it's exposure to Videocon Group was limited to Rs 3250 crores and that it was 10% of the total exposure that other 19 banks had to the account. Videocon Group was lent Rs 40,000 crores for a debt consolidation programme in 2012 by a consortium of 20 banks. The board added that there was no special benefit given to the borrower (Videocon) nor did Kochhar participate in the committee that lent loans.
Gupta in a conversation with Sify.com said the board shouldn't have preached about its internal systems. "Who asked the board to cerify internal review?"
ICICI bank's shares were trading in the negative marginally on Thursday. Stocks were priced at Rs 278.40 on the Bombay Stock Exchange, nearly 1.95% or Rs 5.50 down in the negative.