Ms. Chanda Kochhar, the first woman to head Industrial Credit and Investment Corporation of India (ICICI) Bank (the Bank), has stepped down as its Chief Executive Officer (CEO) on 04-10-2018.
As per newspaper reports, the Bank had sanctioned a loan of Rs. 3,250 Crore (Loan) to Videocon Group in 2012. Further, there were allegations that Videocon Group advanced the Loan amount to NuPower Renewables, thereby, causing a quid pro quo arrangement between the Videocon Group and the Bank on the following grounds:
Venugopal Dhoot, the Chairman of Videocon Group, was earlier a stakeholder and co-owner of NuPower Renewables.
Deepak Kochhar, husband of Ms. Chanda Kochhar, co-owned NuPower Renewables along with his father and Ms. Chanda Kochhar’s brother’s wife.
As per the Reserve Bank of India (RBI) Master Circular- Loans and Advances – Statutory and Other Restrictions dated 01-07-2015, it had laid down certain regulatory restrictions which state that loans and advances should not be granted to relatives of a bank’s chairman/managing director or other directors, etc without the prior approval of the board of directors of the bank.
As per the Securities and Exchange Board of India (SEBI), all directors and key managerial personnels of listed companies should disclose any conflict of interest in any transactions executed by the company. But Ms. Chanda Kochhar failed to disclose the conflict of interest, if any, with regard to transactions between Videocon Group and NuPower Renewables.
The Bank had initiated an inquiry, headed by former Supreme Court Judge B N Srikrishna, to probe various allegations against Ms. Chanda Kochhar. Also, the Central Bureau of Investigation (CBI) has initiated an inquiry against officials of the Bank. The reports of the inquiries are awaited.
Senior Associate at The Indian Lawyer
Sultan Ul-Uloom College of Law, Hyderabad
Intern at The Indian Lawyer