Chanda Kochhar’s dramatic fall from grace is a shocking jolt to the faith that millions have reposed in India’s financial institutions and their leaders. Justice needs to be urgently served.
The CBI has booked Chanda Kochhar on charges of criminal conspiracy, cheating and abuse of official position.
The case pertains to charges of conflict of interest in sanctioning of loans to the Videocon group during Kochhar’s tenure.
The FIR states that Videocon MD VN Dhoot transferred a huge sum of money to her husband Deepak Kochhar’s company NuPower Renewables in a quid pro quo for the loans.
With cases like these surfacing, it doesn’t seem surprising that Indian banks have been piling on toxic assets over the years.
Chanda Kochhar, former CEO & MD, ICICI Bank, has been booked by the CBI on charges of criminal conspiracy, cheating and abuse of official position for ‘dishonestly sanctioning loans to the Videocon Group’.
She has allegedly secured ‘illegal gratification through her husband, Deepak Kochhar, from Videocon MD VN Dhoot for sanctioning a term loan of Rs 300 crore to Videocon International Electronics Ltd’. Apart from this, Chanda Kochhar is also being investigated for her role in influencing disbursal decisions in relevant committees of the bank. A case has also been registered against Deepak Kochhar and VN Dhoot along with unknown public servants.
CBI had registered a preliminary enquiry into the matter in March 2018, when it was investigating irregularities in loans of around Rs 40,000 crore given to the Videocon group by a consortium of lenders. Out of these, ICICI had disbursed a loan of Rs 3,250 crore to the group in 2012, for which allegations of conflict of interest are being explored. Around 86% of this loan is unpaid, as loans to Videocon and its group companies have been declared NPAs on June 30, 2017.
The issue was first raised by whistleblower Arvind Gupta, who talked about it in a blog in 2016. He wrote to the PMO, RBI and other authorities, asking for a probe. But his complaint did not get a response.
UNRAVELLING THE MURKY DETAILS
CBI is scrutinizing the loans given to Videocon by ICICI, which are under the scanner for quid pro quo. However, the role of other senior bank officials including ex-chairman KV Kamath (now president of New Development Bank), present ICICI Bank MD Sandeep Bakhshi, K Ramkumar, Sonjoy Chatterjee (CEO, Goldman Sachs India), NS Kannan, Zarin Daruwala (CEO, Standard Chartered India), Rajiv Sabharwal (CEO, Tata Capital) and Homi Khusrokhan is also being examined.
These officials were members of the sanctioning committee that gave the go ahead to various loans amounting to around Rs 1,575 crore. “These loans have turned NPAs resulting in wrongful loss to ICICI Bank and wrongful gain to the borrowers and accused persons. The role of these senior officials may also be investigated,” states the FIR.
ICICI Bank gave six high-value loans from June 2009 to October 2011. The FIR states that a term loan of Rs 300 crore was sanctioned to Videocon International Electronics Ltd (VIEL) on August 26, 2009, which was “in contravention of rules and policy by the sanctioning committee… Kochhar was one of the members of the sanctioning committee, who in criminal conspiracy… dishonestly by abusing her official position sanctioned this loan in favour of VIEL.”
The loan was transferred on September 7, 2009, to VIEL and almost immediately on September 8, 2009, Dhoot transferred Rs 64 crore to NuPower Renewables, which is managed by Deepak Kochhar. This happens to be the first major capital infusion received by NRL to secure its first power plant, according to the FIR.
In fact, VN Dhoot and Saurabh Dhoot (his nephew) were also directors on the board of NRL, which was set up in December 2008. VN Dhoot then allegedly transferred ownership of NRL to a trust owned by Deepak Kochhar for just Rs 9 lakh, around six months after he received the loan from ICICI Bank.
Also, ICICI gave multiple loans to Videocon to repay its unsecured debts, in clear violation of its credit policy. The loans of VIL and its group companies were declared NPAs on June 30, 2017. These loans were sanctioned after Chanda Kochhar became MD in May 2009.
While ICICI had initially defended Chanda Kochhar, the controversy refused to die down. There are other cases pointing to an unholy Kochhar-Dhoot nexus. The acquisition of the Kochhar house in Mumbai is linked to the Videocon group. Apparently, a 13-storey building in central Mumbai, which served as staff quarters for ICICI Bank employees, was sold to Videocon Industries at a much lower price than the current market rates.
More allegations of conflict of interest surfaced beyond Videocon. For instance, it was found that the Kochhar family had relations with an Essar Shell company. Ultimately, Chanda Kochhar was compelled to step down from her position.
CBI has also conducted raids on the offices of NuPower Renewables and Videocon Group and secured some critical documents. It is expected to soon summon the Kochhars and VN Dhoot for questioning.
ET TU ICICI?
Chanda Kochhar has been one of the tallest leaders in the banking industry over the previous decade, an inspiring success story on how women were breaking the ‘glass ceiling’ in the corporate world. She is also credited for playing a major role in transforming the retail banking landscape in the country.
After the Nirav Modi-Mehul Choksi scam, these charges against the top brass of a bank of the stature of ICICI have further dented the faith of people in the country’s financial institutions. The banking system has been piling on toxic loans over the years. Given cases like these where the desire for selfish personal gain takes precedence over prudence and ethics while disbursing loans, this does not seem surprising at all.
It is critical that cases like the present one against Chanda Kochhar are expeditiously taken to their logical conclusion and justice is served, so that some faith in the financial system gets reinstated.