New Delhi: The Securities and Exchange Board of India (Sebi) may soon summon ICICI Bank Ltd’s on-leave CEO Chanda Kochhar and her husband Deepak Kochhar as part of an investigation into alleged regulatory lapses with regard to his business dealings, officials said today. Some other top officials of the bank, as also from Videocon Industries Ltd—which allegedly benefitted due to its association with Deepak Kochhar—are also likely to be called for personal hearings.
According to top officials, the multi-agency probe into ICICI Bank and business dealings of Kochhar family will also be discussed by the Sebi board next week. Coordinated efforts are required to be taken by Sebi, the Reserve Bank of India and the government in the Videocon loan case due to ICICI Bank’s systemic importance in the Indian banking.
ICICI Bank and Chanda Kochhar have been maintaining there has been no regulatory violation on their part and that she was not aware of specific business dealings of her husband.
Sebi had earlier issued showcause notices to ICICI Bank Ltd, Chanda Kochhar and others after its preliminary examination favoured initiating adjudication proceedings against them for alleged violation of listing disclosure norms regarding “conflict of interest" in business dealings of Deepak Kochhar with the Videocon Group.
Chanda Kochhar is believed to have maintained that she had no information about her husband’s business dealings; the bank has given similar replies.
Sebi, however, is of the view that Chanda Kochhar and ICICI Bank cannot feign ignorance in this matter as they have been regularly listing Deepak Kochhar as a “related party" in the regulatory filings of the company, including in the latest annual filing submitted to the US Securities and Exchange Commission (SEC), which is also probing the case, officials said. ICICI Bank has maintained the same stance in its submissions to the US SEC as well, officials added.
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While US SEC may eventually agree to settle the matter on payment of some settlement fees, officials said such a settlement is unlikely in India despite ICICI Bank indicating such a willingness.
ICICI Bank is being probed for a number of serious allegations including about disclosure lapses regarding business dealings of Deepak Kochhar and his brother Rajiv Kochhar, who are suspected to be directly or indirectly linked to the bank or its big borrowers, officials said. Sebi may soon issue summons for personal hearings of the Kochhars and others over the next few weeks, they said.
ICICI Bank may face a penalty of up to ₹ 25 crore under the relevant Sebi regulations for such lapses, while Chanda Kochhar may be fined up to ₹ 10 crore, besides other penal actions, a senior official said.
The ICICI Bank board has also constituted an “independent enquiry" and Chanda Kochhar has gone on leave till completion of this enquiry. While Chanda Kochhar remains MD and CEO, the group’s life insurance business head Sandeep Bakhshi has been appointed as a whole-time director and COO to handle day-to-day operations of the bank. Bakhshi reports to Kochhar officially.
The bank has maintained that its board has full faith in Chanda Kochhar.
According to Sebi’s preliminary investigations, Chanda Kochhar’s husband Deepak Kochhar has had many business dealings with Videocon Group over the last several years. Deepak Kochhar and Videocon chief Venugopal Dhoot were co-founders and promoters of NuPower Renewables, besides other associations.
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The cases under scanner include the significant loan exposure of the bank to Videocon way back in 2012 and the alleged involvement of Chanda Kochhar’s family members in the restructuring of that loan.
Chanda Kochhar and her family members are facing allegations of quid pro quo and conflict of interest with respect to a loan extended to certain entities.