Videocon loan: ICICI Bank trashes reports of wrongdoing by Chanda Kochhar, says she went by rules

Earlier, the RBI has slapped Rs 58.9 crore penalty on ICICI Bank for non-compliance of directions issued with regard to the direct sale of securities from its HTM portfolio and specified disclosure in this regard.

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New Delhi: India's second-largest private lender ICICI Bank on Thursday came out in full support of its managing director and chief executive Chanda Kochhar, rubbishing reports of wrongdoing in loans given to debt-laden Videocon Group. In Kochhar's defence, chairman M K Sharma said that large loans are approved by board's credit committee, and Kochhar was not head of the committee. 

Saying that ICICI's exposure to the Videocon group (Videocon Industries and 12 of its subsidiaries/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 percent.

Sharma asserted that no individual bank employee has the ability to influence any credit given by it. Sharma also clarified that Kochhar had always made all regulatory disclosures abiding by the Securities and Exchange Board of India guidelines.

"...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. The Board has full confidence and reposes full faith in the Bank`s MD & CEO, Chanda Kochhar," the bank said in a statement on Wednesday.

"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 percent of the total consortium facility in April 2012," Sharma said.

Earlier, country's apex bank RBI has imposed a hefty penalty of Rs 58.9 crore on ICICI Bank Limited (the bank) for non-compliance of directions issued with regard to the direct sale of securities from its HTM portfolio and specified disclosure in this regard. Through an order dated March 26, the Central bank imposed the penalty taking into account the failure of the bank to adhere to its directions.

The RBI said that the action is based on the deficiencies in regulatory compliance. It added that the action "is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers." The central bank in its notification has not elaborated on how ICICI Bank failed to comply with its norms. 

Banks need to disclose the amount of securities they keep under the HTM segment under which the papers are held until maturity and cannot be used for intraday trading. The RBI allows banks to sell securities from HTM subject to certain limits and disclosure rules.

(With agency inputs)