CASE STUDY ON RISKS IN BANKS

Ms. CHANDA KOCHHAR, CEO of ICICI Bank:

In 1984, Chanda Kochhar joined ICICI as a management trainee and 25 years later became the
MD & CEO. She is the first woman to head Industrial Credit and Investment Corporation of
India (ICICI) Bank. In addition to finance, planning and communications, her responsibilities
include the global treasury, principal investments &trading, risk management and legal
functions. She is also responsible for day-to-day guidance and administrative matters relating
to compliance and internal audit functions. Under the leadership of Ms. Kochhar the Bank has
won several prestigious awards: “Best Retail Bank in India” in 2003, 2004 2005
respectively.
ICICI Crisis:
But the problem started on March 2016, when Shareholder activist Arvind Gupta, who is also
the founder and trustee of Indian Investors Protection Council, writes to Prime Minister
Narendra Modi on March 15, 2016, highlighting "the illicit banking and commercial
relationship between Videocon Group of Venugopal Dhoot and ICICI Bank's MD & CEO
Chanda Kochhar's family". When Gupta did not hear back from the authorities, he eventually
reproduced the letter on his blog in October 2016.
Chanda Kochhar husband Deepak Kochhar and some family members had a joint venture with
Venugopal Dhoot of Videocon group. The allegation against her is that ICICI bank provided
loans to Videocon group, which through its various arm invested in the joint venture of her
husband’s company. The company related to Videocon group chairman Venugopal dhoot
invested 64 crore in NuPower in 2010. Later the proprietorship of the company was transferred
to a trust owned by Mr. Deepak Kochhar for 9 Lakhs after Videocon group received a loan of
Rs. 3250 crore from ICICI Bank in 2102 which later declared as NPA.
As per the RBI Master Circular-Loans, advances and other restrictions, it has laid down
certain regulations which state that loans and advances should not be granted to relatives of a
bank’s Chairman or MD or other directors without prior approval of board of directors of the
bank.
As per SEBI, all directors and key managerial personnel of listed companies should disclose
any conflict of interest in any transactions executed by the company. But Ms. Chanda Kochhar
failed to disclose the transaction between Videocon group and NuPower Renewables .
In May 2018, SEBI sends a notice for non-compliance with disclosure norms in dealings
with the Videocon Group and Nupower Renewables.
On January 2019, The CBI books Kochhar, her husband and Dhoot for alleged cheating and
corruption in sanctioning loans to the Videocon Group, which caused a loss of Rs 1,730 crore
to the bank. The agency reported that ICICI Bank sanctioned six high-value loans to various
Videocon companies between June 2009 and October 2011, starting soon after Kochhar took
over as CEO. In fact, she was reportedly a part of the sanctioning committee which had
approved a loan of Rs 300 crores to Videocon International Electronics Ltd and Rs 750 crore
to Videocon Industries Ltd.