The regulator had asked why ICICI Bank should be spared punitive action as it was seen as violating the Listing Obligations and Disclosure Requirements (LODR) regulations.
ICICI Bank has refuted market regulator SEBI's charge that it violated disclosure norms in the matter of loans granted to Videocon, by saying that it was unaware of any conflict of interest at that point in time. The bank sent its reply to SEBI last week, according to a report in Business Standard.
The regulator had asked why ICICI Bank should be spared punitive action as it was seen as violating the Listing Obligations and Disclosure Requirements (LODR) regulations. The lender allegedly did not flag potential conflict of interest arising in the case of its full-time directors.
In May, adjudication proceedings were launched against Chanda Kochhar, the bank’s managing director and chief executive officer, after it came to light that her husband had financial dealings with the Videocon group.
The publication reported that Kochhar has sought an extension to the lapsed deadline of August 24 to furnish a reply to the charges made against her in the show cause notice. The bank responded to SEBI, laying bare the process involved in the disbursal of a loan worth Rs 325 crore.
The bank, on its part, has shielded Kochhar, saying that a credit committee headed by KV Kamath, took the final call on sanction the loan to Videocon. Kochhar was a member of the 12-member committee. ICICI Bank is a part of the consortium of lenders from which Videocon managed to get loans to the tune of Rs 4,000 crore. ICICI has reportedly classified Rs 2,810 crore of its total exposure to Videocon, as a non-performing asset (NPA) in 2017.
In its defence, the lender said it acted swiftly after the crisis blew over. The bank’s board has initiated an independent inquiry to be supervised by former Supreme Court judge B N Srikrishna. Business Standard reported that the bank is reluctant for a settlement through the consent mechanism, as it is of the opinion that the Srikrishna panel will throw up findings contrary to SEBI’s perception of the matter.
Chanda Kochhar had admitted that her husband Deepak Kochhar was involved in business dealings with the Videocon group, as a part of SEBI’s preliminary inquiry. She also acknowledged that Deepak Kochhar and Venugopal Dhoot co-founded NuPower Renewable. They are also the promoters of the wind energy firm. Notably, Videocon group is a major investor in NuPower.
Shares of NuPower held by Dhoot and Pacific Capital, a company that was owned by Deepak Kochhar’s father and sister-in-law, were sold to Supreme Energy in 2009. SEBI found that Dhoot’s interest in NuPower did not end there. It holds debentures worth Rs 64 crore in NuPower in the form of subscription through Supreme Energy.A preliminary enquiry undertaken by SEBI concluded that there was conflict of interest in ICICI Bank’s dealings with Videocon. The regulator believes that by not acknowledging her husband’s dealings with Videocon, Chanda Kochhar was violating the provisions of the listing agreement. Kochhar is on leave of absence till the probe into her role in the case submits its findings.