ICICI Bank-Videocon Controversy: Latest In Rs 3,250 Crore Loan Case

ICICI Bank's CEO and managing director Chanda Kochhar is in a tight spot after a media report hinted that she allegedly favoured Videocon Group's Venugopal Dhoot while lending money to the tune of over Rs 3,250 crore. The bank's CEO had sanctioned Rs 3,250 crore loan to Videocon in 2012, while allegedly giving undue favours to the group in lieu of some favours bestowed upon her husband Deepak Kochhar and kin by Venugopal Dhoot. In a sharp criticism to the allegations, ICICI Bank's board reviewed the bank's internal processes, and observed that "no individual employee, whatever may be his or her position (be it CEO), has the ability to influence the credit decision at the Bank."

ICICI Bank-Videocon Group controversy. Things To Know

1. As per a media report, Venugopal Dhoot of Videocon Group, in 2008, set up a company with Deepak Kochhar, husband of ICICI Bank MD and CEO Chanda Kochhar, and two of her relatives. Mr Dhoot later gave Rs 64 crore loan to this company through an entity owned by him. Later, he transferred the ownership of this entity to a trust headed by Deepak Kochhar for a meagre amount of just Rs 9 lakh, The Indian Express investigation discovered.

2. The transfer of the company to Deepak Kochchar happened six months after the Videocon Group got a loan of Rs 3,250 crore from ICICI Bank. Almost 86 per cent of that loan (Rs 2,810 crore) remains unpaid and Videocon account was declared as a non-performing asset (NPA )in 2017.

3. ICICI Bank refutes the allegations and said that ICICI Bank's share of the total loan, disbursed to the Videocon Group by a consortium of banks, was lower than 10 per cent. The remaining 90 per cent of the loans were sanctioned by other banks and financial institutions, according to an official release released by the bank. So ICICI Bank seemed to imply that it was not the only lender to give preferential treatment to Videocon . When Videocon can raise over Rs 36,750 crore from a consortium of 20 banks, why can't ICICI Bank lend it Rs 3,250 crore amount, ICICI Bank seemed to imply in the official statement received by NDTV.

4. ICICI Bank was not the lead bank for this consortium and it only sanctioned its share of loan.

5. The decision to lend the money was not solely taken by Chanda Kochhar. The Credit Committee of ICICI Bank in 2012 sanctioned its share of facilities in the syndicated arrangement to the Videocon Group. She was not the committee's chairperson, the statement said.

6. ICICI Bank's terms and conditions offered for these loans are similar to the ones offered by other banks in the consortium, thereby ruling out the possibility of any alleged special benefit to the borrower by ICICI Bank.

7. ICICI Bank statement further stated that the amount of loan given to Videocon Group was deposited into the common escrow pool account by all the banks of consortium, including ICICI Bank. The escrow account was being maintained for this purpose by the lead bank.

8. Adding to the woes of ICICI Bank, Reserve Bank of India (RBI) has fined Rs 58.9 crore for not sticking to certain rules about sale of government securities. The RBI imposed the penalty on ICICI Bank for not complying with directions issued by it on direct sale of securities held under the bank's held-to-maturity (HTM) portfolio and for lack of disclosure about the sale. Bonds acquired by banks with an intention to hold until they mature are classified under the HTM category, and the amount of such securities need to be disclosed by the lenders.

These debt instruments are also not allowed to be traded on a day-to-day basis. ICICI Bank said it continued to sell bonds from its HTM category for a few weeks during the quarter ended March 2017 due to "genuine misunderstanding" on the timing of the applicability of RBI's direction in the matter.

The lender said it disclosed in its fiscal year 2017 annual report that it had sold over 5 percent of investments under the HTM category. However, it had not made the specified additional disclosure at the time, the bank said in a statement on Thursday.