The Central Bureau of Investigation’s (CBI) FIR alleging criminal conspiracy and cheating in loans extended by the ICICI Bank to the Videocon Group does not appear to have factored in a key point flagged by the central bank in its initial probe into the allegations of misdemeanour in extending the loans.
As pointed out by the Reserve Bank of India (RBI) then, ICICI Bank was just one of 20 banks that were part of a consortium led by the State Bank of India that extended loans to the Videocon Group. The bank’s share in the consortium’s loans to the group, which were declared non-performing assets in 2017, was less than 6%.
In its FIR against ICICI Bank’s former managing director and CEO Chanda Kochhar, her husband Deepak Kochhar and Videocon Group managing director Venugopal Dhoot on Thursday, the CBI’s chief contention against the Kochhars was Ms. Kochhar used her official position to approve loans to the Videocon Group firms, and received ‘illegal gratification and undue benefit through her husband.’
If Ms. Kochhar and other credit committee members of the ICICI Bank are guilty of extending loans to the Videocon Group, on account of quid pro quo benefits accorded by the borrower to the Kochhars, it is not clear what was the motivation for other banks in the consortium to lend to the Videocon Group. And the RBI had said so as far back as December 2016.
In the CBI’s quid pro quo argument, the undue benefit refers to Nupower Renewables Private Limited (NRPL), a firm founded by Mr. Kochhar as a joint venture with Mr. Dhoot, that also got a ₹64 crore capital infusion loan from a firm owned by Mr. Dhoot, months after he had handed over control of the firm to Mr. Kochhar.
The CBI has also implicated other top officials, whose roles in the process of extending the said loans worth ₹3,250 crore, may be probed. These include K.V. Kamath, ICICI Bank’s former chairman, and others who were part of the bank’s credit committee once chaired by Mr. Kamath such as Sandeep Bakshi, the bank’s current CEO and MD.
Complaint to PMO
Ms. Kochhar took charge of the bank’s MD and CEO on May 1, 2009. The RBI’s final position on this case, first flagged as a complaint to the Prime Minister’s Office by a ‘whistleblower’ Arvind Gupta in 2016, is not known. However, when Mr. Gupta’s complaint was forwarded by the government to RBI, the ‘quid pro quo’ link between ICICI Bank loans to Videocon and the transfer of ownership in Nupower Renewables Private Ltd. (NRPL) to Mr. Kochhar, now being cited by the CBI, was firmly dismissed by the central bank.
“As reported in our scrutiny note, the loan sanctioned by ICICI Bank was a part of the debt recast programme of ₹20,195 crore by a consortium of banks led by SBI where ICICI’s share was ₹1,750 crore. The “quid pro quo” could not be established as ICICI Bank had to take a share like other banks in the consortium...” the RBI said in a missive to the Finance Ministry in late December 2016. The central bank’s communique on this has been reviewed by The Hindu.
The transfer of ownership of NRPL by Videocon, the RBI had deemed, was ‘an unrelated event’ outside the banking domain and thus, its regulatory purview. This aspect, it had told the Finance Ministry, can be probed by market regulator SEBI, to whom the original complaint was also marked, as well as the Ministry of Corporate Affairs (MCA). It is not clear from the CBI’s FIR if SEBI and MCA had examined these transactions.
An official aware of the case also pointed out that ICICI Bank and Videocon’s banking ties go back longer than Ms. Kochhar’s tenure and the bank, in fact, lowered its outstanding exposure to the group from about ₹3,350 crore in December 2011 to ₹2,850 crore by March 2018. By contrast, the overall exposure of the banking system to the troubled Videocon Group had risen from ₹33,000 crore to about ₹55,000 crore between December 2011 and September 2017.
