Mumbai (The Hawk): The Central Bureau of Investigation (CBI (NS:CBI)) bit the bullet to apprehend the Kochhar couple in relation to the alleged large Rs 3,250 crore loan fraud involving the defunct Videocon Group almost seven years after the initial accusations arose.
The CBI has accused Chanda Kochhar, 61, of irregularities and violating banking laws and regulations in a number of loans granted to the Videocon Group of businessman Venugopal N. Dhoot between 2009 and 2011, while she was in charge of the bank.
In addition to naming businesses like Videocon International Electronics Ltd., NuPower Renewables Pvt. Ltd., Videocon Industries Ltd. (NS:VEDI), and Supreme Energy Pvt. Ltd., the CBI earlier in 2019 charged the Kochhar couple and Dhoot with violating the Indian Penal Code and the Prevention of Corruption Act.
After the Videocon Group received a loan of Rs 3,250 crore from ICICI Bank (NS:ICBK) in 2012, the CBI claimed that Dhoot allegedly diverted Rs 64 crore to NuPower Renewables, where Deepak Kochhar had a 50% stake, raising concerns and ethical issues given that Chanda had set the credit limits for the Videocon Group companies.
According to the CBI charge sheet, under Kochhar, the ICICI Bank approved loans to the Videocon Group and other parties in flagrant violation of the bank's policies. When these loans were later deemed non-performing assets (NPAs), the bank suffered losses, while the accused and borrowers made illegal gains.
The CBI also sought to look into the actions of other senior ICICI Bank executives who allegedly followed Chanda's orders to issue loans to the Videocon Group and other companies.
The loans to the Videocon Group companies and other borrowers eventually became non-performing assets (NPAs) by 2017. According to the CBI, the majority of these loans were flagged as "frauds" after the investigation because they were flagged for flagrant violations of the law, banking regulations, and bank policies.
According to unaffiliated banking circles, the ICICI Bank reported the most non-performing assets (NPAs) under Chanda's leadership, and according to an RTI response obtained by Pune businessman Prafful Sarda, it will have accumulated up to an astounding Rs 200,000 crore by 2021.
Just last week, Nirmala Sitharaman, the minister of finance, told the legislature that among other banks, the ICICI Bank has written off loans of Rs 42,164 crore.
Chanda went on leave in early 2018 as the heat increased and subsequently submitted an application for early retirement, which the ICICI Bank accepted ostensibly because it was kept in the dark about specific facts and made no disclosures regarding numerous difficulties that later surfaced.
After receiving complaints and media coverage, the ICICI Bank formed a committee in June 2018 under the leadership of Justice B. N. Srikrishna, a retired Supreme Court justice, to look into all Chanda's accusation from April 2009 to March 2018.
Her handling of "conflict of interest" and "proper disclosure or recusal" obligations, violations of the ICICI Bank Code of Conduct, and a lack of "diligence" with regard to annual disclosures as required by the bank were all criticised in the study.
After receiving this report, the ICICI Bank made the difficult decision to treat Chanda's separation as "Termination for Cause," with all of the severe repercussions that entails, such as the revocation of all of her current and future entitlements, including unpaid amounts, bonuses, increments, unvested and vested and unexercised stock options, medical benefits, and bonuses paid to her during the investigation period.
Shaken by the events, Chanda not only contested Justice Srikrishna's report but also the ICICI Bank's decision to terminate her employment in the Bombay High Court and later the Supreme Court, only to be unsuccessful.
These changes put an end to the bright young woman of Indian banking who was born in Jodhpur and educated in Mumbai falling into disgrace within 16 years of joining the ICICI Bank as a trainee in 1984 and rising to the position of Executive Director in 2001.
From that point on, she expanded her wings and quickly ascended the corporate ladder, eventually rising to the position of MD & CEO in 2009, when she suddenly seemed to be going downhill with the bank.
Chanda received numerous national and international honours over the years, including the Padma Bhushan. She also advised the government on policy matters and was a highly sought-after speaker at national and international events.
Chanda's arrest by the CBI brings another grisly end to what could have been an illustrious banking career. It also ranks among several high-profile banking scams that have shaken the Indian banking sector, and she is one of a select group of brilliant top women bankers who have fallen victim to ignominy.
(Inputs from Agencies)