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Closing in.
THE NOOSE TIGHTENS

One of India’s most celebrated woman bankers is booked in a $242 million fraud case

By Nupur Anand

The nepotism scandal at India’s ICICI Bank, which brought to pass the downfall of its celebrated former chieftain Chanda Kochhar, just got murkier.

Not only has the former CEO of India’s second-largest private lender been pulled deeper into the scandal, but more high-profile names have also been drawn in. This includes Kochhar’s immediate successor, Sandeep Bakhshi, besides her immediate predecessor, KV Kamath, one of the leading figures of India Inc.

On Jan. 24, India’s premier investigating agency, the Central Bureau of Investigation (CBI), charged Kochhar with defrauding ICICI Bank. She misused her position and sanctioned unscrupulous loans, thereby cheating the company of Rs1,720 crore ($242 million), according to the first information report (FIR) filed by the agency.

Bakhshi, like Kochhar, is an old ICICI hand. He joined the group in the project finance division in 1986 and worked his way across wholesale banking, and the small and medium enterprises business, apart from retail banking. Prior to his current posting, he was CEO of ICICI Prudential Life, the bank’s insurance arm.

KV Kamath, former CEO and non-executive chairman of ICICI Bank, is currently chairman of the New Development Bank—a multilateral development agency established by BRICS in 2014.

It has been alleged that Kochhar unfairly granted loans to NuPower Renewables, a power producer founded by her husband, Deepak Kochhar, also named in the CBI FIR. Venugopal Dhoot, the managing director of the Videocon group who had invested in NuPower Renewables, is another accused in the case.

Both Bakhshi and Kamath were on the committee that sanctioned the loans, a majority of which later became non-performing assets (NPAs).

In March 2018, the CBI registered a preliminary enquiry (PE) against Dhoot, Deepak Kochhar, and others. A PE is the investigative step preceding the filing of an FIR, which is lodged to probe criminal charges on the basis of evidence collected. Now that an FIR has been filed, it means a formal investigation by the CBI has begun.

The investigative agencies had also carried out searches across Dhoot and Deepak Kochhar’s offices in Mumbai and Aurangabad, in the state of Maharashtra. Here’s all you need to know about the CBI’s FIR:

The back story

In 2016, a whistleblower first accused Kochhar of nepotism and favouritism in granting a loan to NuPower Renewables. The whistleblower had also sent a letter to prime minister Narendra Modi, but the issue came to light only last year after details of the letter emerged in a blog post.

It was alleged that ICICI Bank had granted loans to the Videocon group and 12 of its subsidiaries. Before the loan was  approved, Dhoot transferred a controlling stake in NuPower to an associate, Mahesh Chandra Punglia. After the loan was approved, Punglia sold his stake to Deepak Kochhar for a mere Rs9 lakh.

Quid pro quo allegations were soon levelled against Chanda Kochhar, who was at the helm of the bank between 2009 and October 2018, when she stepped down following the allegations.

The FIR

The FIR states that between June 2009 and October 2011, ICICI sanctioned six high-value loans to various Videocon Group companies. The first loan of Rs300 crore was sanctioned to Videocon International Electronics Ltd (VIEL) and disbursed on Sept. 07, 2009. Chanda Kochhar was one of the members of the sanctioning committee.

The FIR notes that the very next day, Dhoot transferred Rs64 crore to NuPower Renewables from Videocon Industries via his other firm, Supreme Energy. “Thus Chanda Kochhar got illegal gratification/undue benefit through her husband from Videocon Industries/VN Dhoot for sanctioning rupee term loan of Rs300 crore to VIEL,” the CBI FIR states.

Then, during 2009 and 2011, more loans were granted to other companies owned by Dhoot and his family: Millennium Appliances India (Rs175 crore, June 30, 2009), Sky Appliances (Rs240 crore, Nov. 17, 2010), Applicomp India (Rs300 crore, May 30, 2011), and Videocon Industries (Rs750 crore, Oct. 31, 2011).

“It was further alleged that the then MD & CEO, ICICI Bank, being the head of the sanctioning committee, who in criminal conspiracy with other accused to cheat ICICI Bank, dishonestly and by abusing her official position sanctioned this loan in favour of said Mumbai based private company,” said the CBI.

Almost 86% of these loans (Rs2,810 crore) remained unpaid by the Videocon group and they turned into NPAs for the lender in 2017. “These loans have turned NPA resulting in wrongful loss to ICICI Bank and wrongful gain to the borrowers and accused persons,” added the FIR.

The new names

The buck doesn’t stop at Chanda Kochhar; the other top bankers who have been named in the FIR were on various loan-sanctioning committees.

K Ramkumar, former executive director; Sonjoy Chatterjee, chairman, Goldman Sachs India and formerly on the board of ICICI Bank; NS Kannan, managing director and CEO of ICICI Prudential Life and a former executive director of the bank; Zarin Daruwala, the current CEO of Standard Chartered India; Rajiv Sabharwal, the current CEO of Tata Capital who was earlier an executive director at ICICI; and Homi Khusrokhan, advisor to Tata Capital who had served as an independent non-executive director of the bank have also been named.

How the bank reacted

Soon after the allegations emerged last year, the bank shielded Chanda Kochhar, terming all allegations against her as baseless. But as the noose tightened around her in May 2018 and the Securities and Exchange Board of India (SEBI), India’s market regulator, initiated an inquiry against Kochhar and the bank for not making adequate disclosures, the lender was also forced to take some corrective steps.

A former judge of the supreme court, BN Srikrishna, was roped in by the bank to lead its internal probe.

Chanda Kochhar is a recipient of the Padma Bhushan, one of India’s highest civilian honours. Prior to being promoted as CEO, she had worked in different capacities at the bank since 1984.

As news of the current and former CEOs being charged by the CBI emerged, investors gave ICICI Bank a thumbs down and its stock fell by nearly 2% on BSE on Jan. 24.