Questions Yet To Be Fully Answered By ICICI Bank
Towards the end of his brief statement, which mirrored the ICICI Bank board’s press statement issued yesterday, ICICI Bank Chairman MK Sharma listed a few questions received by bank from various media and offered some responses.
Shouldn’t Chanda Kochhar have recused herself from the committee that approved the Rs 3,250 crore loan to the Videocon group, given that her spouse had business dealings with the Group?
Sharma said that the board did not see any conflict of interest as the Videocon Group was not an investor in Nupower. The loan was part of a consortium agreement and hence the board did not see any reason for Kochhar to recuse herself.
But Sharma did not acknowledge that as per an Indian Express report and a whistleblower blog written in 2016, Videocon Group-promoter Venugopal Dhoot was an investor in Nupower.
Did Chanda Kochhar disclose her spouse’s business relationship with the Videocon Group at the time ICICI Bank approved the loan to it?
All Sharma said was that Kochhar has been making all her disclosures in accordance with regulatory guidelines.
He did not mention whether this specific disclosure had been made.
Has banking regulator Reserve Bank of India sought details regarding the ICICI Bank’s and Deepak Kochhar’s transactions with Videocon Group?
Sharma said the bank had “satisfactorily replied to all regulatory questions”. That such communication was part of regular activity and also privileged information. He said the bank will not share any specific details regarding communication with regulators.
Watch ICICI Bank Chairman MK Sharma's Statement To Media And Expert Responses
Need More Clarification On The Videocon Transaction, Says Hemindra Hazari
The main question is “whether the board was aware that Chanda Kochhar's husband has business dealings with the Videocon group,” said Independent Banking Analyst Hemindra Hazari, in a conversation with BloombergQuint.
Key points he made...
- Videocon Group has been a borrower from ICICI Bank since the 1990s.
- Videocon's rating never went higher than BBB, so the bank should clarify why a large loan was given to the group.
- A bank's managing director has huge bearing on disbursal on giving of loans despite not being chairman of credit committee.
“It is very disappointing when the chairman of such a big bank comes for a press meeting, reads a statement and walks out without taking even one question,” he said, adding that more clarity on the transaction is needed.
No Need For Chanda Kochhar To Recuse Herself From Committee That Approved Videocon Loan, Says MK Sharma
MK Sharma said that CEO Chanda Kochhar was not the chairperson of the committee that sanctioned the loan to Videocon Group. He added that the bank’s board did not see any conflict of interest and that Kochhar has been making all disclosures in accordance with regulations.
Key points he made...
- Chanda Kochhar was part of the credit committee that approved loan to Videocon Group.
- The board does not see conflict of interest as Videocon Group was not an investor in Nupower.
- Board saw no need for her to recuse herself.
- The loan was part of the consortium arrangement.
- She has been making all her disclosures in accordance with regulatory guidelines
- We have satisfactorily replied to all regulatory questions. This is part of regular activity. As it is privileged information we cannot share it.
- The company will not share any specific details regarding communication with regulators.
ICICI Bank Chairman MK Sharma Reiterates Points Made In Yesterday's Statement Regarding ICICI Bank's Exposure To Videocon Group.
- The process adopted by ICICI Bank to sanction loan to Videocon Group
- Consortium of 20 banks to Videocon Group aggregating Rs 40,000 cr
- ICICI Bank’s exposure to the Videocon Group is part of this facility
- The bank’s board concluded there was no question of favouritism, nepotism
- No individual employee has ability to influence decision on credit given by bank
He also said that none of the investors of Nupower Renewables, a company founded by Chanda Kochhar’s spouse Deepak Kochhar, are borrowers of ICICI Bank.
Press Conference To Begin Shortly
ICICI Bank’s Chairman MK Sharma will address the press shortly.
ICICI Bank On Review Of Internal Processes, As Per Statement Issued On Wednesday
- Have a well-structured and standardised credit approval process.
- Multiple independent departments involved in credit risk rating, appraisal and approvals.
- Credit approval authorisation framework laid down by the board.
- Larger exposures are approved by board’s Credit Committee of the Board.
- Adequate checks and balances in loan appraisal, rating and approval processes.
ICICI Bank On NuPower Renewables Founded By Deepak Kochhar, As Per Statement Issued On Wednesday
The Bank desires to clarify that none of the investors of NuPower Renewables are borrowers of ICICI Bank.ICICI Bank Statement
ICICI Bank On Exposure To Videocon Group, As Per Statement Issued On Wednesday
- In 2012 a consortium sanctioned Rs 40,000 crore to Videocon group.
- ICICI Bank’s current exposure to Videocon group is part of this arrangement.
- ICICI Bank was not the lead bank for this consortium.
- It only sanctioned approximately Rs. 3,250 crore based on Credit Committee approval.
- Chanda Kochhar was not the Chairperson of this Committee.
- Terms and conditions offered for these loans similar to those offered by other banks in consortium.
- All banks including ICICI Bank disbursed the Rupee Term Loan into the common escrow pool account.
- ICICI Bank’s share of the banking sector’s exposure to Videocon group was less than 10 percent.
What Are The Allegations About?
Similar speculation had been aroused in mid-2016 by a whistleblowing investor in ICICI Bank. The letter raised concerns about transactions between the Videocon Group and renewable energy company NuPower Renewables, owned and operated by Chanda Kochhar's spouse Deepak Kochhar. This may have amounted to conflict of interest regarding loans sanction by the Bank to Videocon Group. The whistleblower alleged that there could've been quid pro quo involved.
The concerns returned in the past few weeks with media reports suggesting that investigative agencies in Delhi have been re-looking at the allegations.
BloombergQuint could not independently ascertain whether the allegations were true or not.
ICICI Bank Defends Chanda Kochhar In Statement
India's second largest private bank ICICI Bank Ltd. has expressed its "full faith" in chief executive Chanda Kochhar to dispel concerns that resurfaced around the sanctioning of loans to debt-laden Videocon Industries Ltd, and alleged loans to a firm founded by her husband.
The board has full confidence and reposes full faith in the bank's managing director and CEO Chanda Kochhar, the private lender said in a stock exchange filing. The board also reviewed the bank's internal credit approval processes and found them robust, the filing added.
ICICI Bank said that its processes are such that "no individual employee, whatever may be his or her position, has the ability to influence the credit decision at the Bank". It also clarified that none of the investors of NuPower Renewables are borrowers of ICICI Bank.
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