ICICI Bank, Chanda Kochhar row: Why was RBI silent?

The silence of Reserve Bank of India on the ongoing ICICI Bank loan Videocon Industries is a matter of much debate. The central bank did not make any inquiries with ICICI Bank on the sanctioning of loans to Videocon Industries in the last two years. In 2016, RBI when Raghuram Rajan was the governor had questioned the bank on the criteria it had adopted to disburse loans of Rs 3,250 crore to Videocon Industries as part of the consortium. "Ever since the bank answered all the queries, the regulator did not press for any further enquiries, which may have put to rest the need for further investigation," a source said.

"Two years since the bank has not heard from the regulator. RBI has not made any queries in the recent past with regard to the questions raised in your email. We would urge you not to speculate on such important matters," said a spokesperson of the bank in response to the queries sent by DNA Money.

RBI did not reply to a a questionnaire sent to it.

The only new development is the Central Bureau of Investigation (CBI), which has now initiated an preliminary inquiry on ICICI Bank about the circumstances surrounding the sanction of Rs 3,250 crore to Videocon Industries in 2012. CBI's inquiry is against some unnamed officials of the bank. The agency as part of this inquiry has sent the bank a set of questions that the lender needs to answer in ten days.

"Enforcement directorate investigating the issue is not true," the bank had said in response to a clarification sought by BSE.

While media is rife with rumours of various investigations, ICICI Bank's MD & CEO Chanda Kochhar has not been implicated in any case by the investigating agency so far. Kochhar has been maintaining her regular work schedule at the bank by coming to office every morning at 9.15 am and working till late evening, a routine she has been maintaining for the last 30 years at the bank in various responsibilities. "She chairs all the regular meetings and is right now busy finalising the annual results of the bank," said an official.

ICICI Bank Board continues to repose faith in their chief executive officer and managing director contrary to reports that some board members are having a difference of opinion. "Going by the working of the bank's branches the bank has grown beyond one individual, we have our systems in place so the ongoing controversy surrounding the top boss has no impact on the day to day functioning of the bank, said an employee of the bank when DNA Money visited a few large branches of the bank to find out if the developments at the bank had impacted the workings at the bank's branches.

ICICI Board has denied any wrongdoing, highlighting that the loan was underwritten in accordance with the bank's credit standards and was extended as part of a consortium involving over 20 banks. The bank has stressed that it has not given any credit to the borrower group outside of the consortium.

Fitch in a report issued on April 9 had said, "Nevertheless, the presence of the bank's CEO on this credit committee - and the bank's reluctance to support an independent probe - have, in our opinion, created doubts over the strength of its corporate governance practices."

Chanda Kochhar is at the centre of a controversy for being part of a credit committee that sanctioned a loan to Videocon Industries, whose promoter Venugopal Dhoot was also a shareholder in NuPower Renewables, the company promoted by her husband Deepak Kochhar. The issue was brought to light by a shareholder of both Videcon Industries and ICICI Bank Arvind Gupta who had send a detailed letter on the affairs of the bank to the prime minister and other regulatory agencies like the Reserve Bank of India (RBI).

DEALING WITH STRESS

• In 2016, RBI governor Raghuram Rajan had questioned ICICI Bank's loan disbursement to Videocon  
• CBI has now initiated an preliminary enquiry on ICICI Bank  
• Agency as part of this enquiry has sent the bank set of questions that the lender needs to answer in ten days  
• Contrary to reports ICICI Bank board continues to repose faith in their CEO & MD

By Manju AB

Source: DNA Money