MUMBAI: Reiterating its stand on the Videocon issue, ICICI Bank chairman M K Sharma on Thursday said reports alleging nepotism by the lender’s MD and CEO Chanda Kochhar were unfounded and malicious in nature.
Saying that ICICI Bank’s exposure to the Videocon Group (Videocon Industries and 12 of its subsidiaries or associates as co-obligors) for a debt consolidation programme and for the group’s oil and gas capital expenditure programme aggregating approximately Rs 40,000 crore was less than 10 per cent.
The clarification came even as the Reserve Bank of India imposed a penalty of Rs 58.9 crore on the ICICI Bank for violating its directions on direct sale of securities.
Sharma asserted that no individual bank employee has the ability to influence decisions of the credit committee.
“Given this architecture of sanctioning all loans by the credit committee comprising of independent directors, no individual employee, howsoever…. (higher in) position has the ability to influence the decision on credit given by the bank,” Sharma said at a press conference in Mumbai.
He clarified that none of “the investors of NuPower Renewables are borrowers of ICICI Bank” and that Kochhar did not chair the committee that had lent to Videocon.
“Kochhar was part of the credit committee which sanctioned these loan facility to the Videocon Group. The Board does not see (this) as conflict of interest in any manner since Videocon Group is not an investor in NuPower Renewables. Hence, there was no need to recuse herself from this committee,” Sharma said. “ICICI Bank was not the lead bank for this consortium and the bank only sanctioned its share of facilities aggregating approximately Rs 3,250 crore which was less than 10 per cent of the total consortium facility in April 2012.”
In addition, Sharma informed at the press briefing that Kochhar has been making all her disclosures in accordance with the regulatory guidelines under the Companies Act and the Banking Act.
Sharma revealed that the bank has ‘satisfactorily’ replied to the questions of all the regulators, which he described as an ongoing process between “a regulated entity like a bank and the regulators and other government departments”.
In 2012, a consortium of 20 banks and financial institutions sanctioned credit facilities to the Videocon Group for a debt consolidation programme and for its oil and gas capital expenditure programme aggregating to approximately Rs 40,000 crore.
Imposing the penalty of Rs 58.9 crore on the bank for violating its directions on direct sale of securities, the RBI said in a notification issued on Thursday that “the Reserve Bank of India has imposed through an order dated March 26, 2018, a monetary penalty of Rs 589 million on ICICI Bank Limited for non-compliance with directions issued on direct sale of securities from its HTM (held-to-maturity) portfolio and specified disclosure in this regard,”
ICICI Bank said the violation was “due to a genuine misunderstanding on the timing of the applicability of RBI’s directions in this matter”.
It said: “RBI has imposed a penalty on the bank for continued sale of government securities classified as HTM.”
The bank said it continued with the sales from HTM category for a few weeks during the quarter ended March 31, 2017.
It further said that it would give utmost importance to regulatory compliance and endeavours to meet supervisory expectations.
The RBI said the penalty imposition was being done in exercise of powers vested in RBI under the Banking Regulation Act, 1949 after taking into account failure of the bank to adhere to the directions issued by central banker.
This action, RBI added, was based on the deficiencies in regulatory compliance.