One of India’s best-known banking executives, Chanda Kochhar, is caught in the midst of a raging controversy involving favouritism over loan disbursement.
The managing director and CEO of India’s second-largest private sector lender, ICICI Bank, has come under pressure after a blog containing a whistleblower’s letter came to light. On March 29, The Indian Express newspaper, too, alleged a possible nexus between the Videocon Group, Kochhar, and her husband Deepak Kochhar who is the founder of NuPower Renewables.
The report raises questions over a conflict of interest, pointing out that Venugopal Dhoot, chairman of Videocon, set up a company with Deepak Kochhar and secured loans from ICICI Bank. A few months after the loans were granted, Dhoot transferred the ownership to Deepak Kochhar and exited the firm. The issue is now being probed by investigating agencies, according to The Indian Express.
Kochhar’s association with ICICI is over three decades old. She began her career with the erstwhile ICICI Limited in 1984 and was later elevated to the board of directors of ICICI Bank in 2001. She took over as its head in 2009 and has been credited with strengthening the lender’s retail operations.
The bank’s board has, meanwhile, mounted a robust defence in the Videocon loan issue. It said that Kochhar wasn’t the chairperson of the committee that granted the loans. It insists that the doubts being raised are just “malicious and unfounded rumours.”
The lender has clarified that loans of Rs40,000 crore ($6.14 billion) were granted to the firm as part of a deal with a consortium of 20 banks. ICICI Bank’s share in it was around Rs3,250 crore, less than 10% of the total, it said in a notice sent to exchanges on March 28. About 86% of this loan (Rs 2,810 crore) is yet to be repaid and the Videocon account was declared a non-performing asset in 2017 by ICICI Bank.
“The board has come to the conclusion that there is no question of any quid pro quo/nepotism/conflict of interest as is being alleged in various rumours…Given this architecture (bank’s credit assessment process), no individual employee, whatever may be his or her position, has the ability to influence the credit decision at the bank,” it added.
Earlier this month, Kochhar was summoned by investigative agencies in connection with the probe into the $2 billion Punjab National Bank fraud case. A recent spike in the number of fraud exposés in India has taken the wind out of the Indian banking ecosystem, already saddled with a gigantic bad-loan pile of Rs9.5 lakh crore.
It is now to be seen how investors react to this latest episode involving Kochhar as the Indian stock markets are closed till April 02.