ICICI Bank Says No Question Of Nepotism Or Conflict Of Interest By Chanda Kochhar

Gold Silver Reports (GSR) – 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.

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.

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.

“It is a good thing that they have decided to put a lid on this. In fact my view all along has been that when the story first started surfacing in 2016 the board should have said that either a committee of the board, or a consultant who has looked at all the charges, and based on that said that, whether any action had to be taken, or did not have to be taken.” 

It was absolutely necessary for the bank to respond to the rumours, said independent banking analyst Hemindra Hazari. As for the bank’s credit process as detailed in its statement, Hazari said it was “although this is boilerplate template, it looks straightforward and robust, in the real word, unfortunately, this is not how banking operates. There are definitely ways and means by which if a CEO wants to push a loan, they can bypass all these systems”.

All the banks and especially private sector banks have a very robust system, where the sanctions are done by a senior committee or the board, as the case may be, said VG Kannan, CEO of the Indian Banks’ Association. “I’m sure the same process was being followed, and which is what they have confirmed. So I would go by the statement, and it appears to be very much in order”.

ICICI Bank said its board concluded there was no question of any quid pro quo, nepotism or conflict of interest as is being alleged in various rumours.

“We would urge you not to be misled by these rumours which are being spread to malign the Bank and its top management.”

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Neal Bhai has been involved in the Bullion and Metals markets since 1998 – he has experience in many areas of the market from researching to trading and has worked in Delhi, India. Mobile No. - 9899900589 and 9582247600

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