Two days after Chanda Kochhar, the former managing director and CEO of ICICI Bank was arrested with her husband Deepak in connection with the loan fraud case on Friday, the Central Bureau of Investigation (CBI) arrested Videocon Group’s Venugopal Dhoot today.
A CBI custody order was later issued for the couple until Monday. The Enforcement Directorate (ED), which investigates financial crimes, is also involved in the probe of this case.
An investigation was conducted by the ED last month into Dhoot’s activities. NuPower Renewables director Mahesh Pungalia, a close aide of Dhoot, was also questioned by the agency. In February 2019, the ED filed a case against Dhoot, Chanda and Deepak Kochhar. The residences of the suspects have also been searched in the past.
What Is The Loan Fraud Case?
In 2018, Kochhar was forced to leave her job at ICICI Bank due to the multi-billion fraud scandal. She has refuted each and every accusation made against her and her spouse.
In November that year, after declaring that the bank’s action against Chanda Kochhar was constitutional, the Bombay High Court declined to offer her temporary relief. The bank cut off Kochhar’s retirement benefits and clawed back bonuses in defiance of her desire to honour her commitments and contractual duties.
The case is regarding a Rs 3,250 crore loan that Chanda Kochhar, then CEO and MD of ICICI Bank, allegedly gave the Videocon Group as a quid pro quo. The loan was allegedly exchanged for an investment in NuPower, by Videocon promoter Venugopal Dhoot and owner Deepak Kochhar.
Conflict began as a result of charges made against Chanda Kochhar by a whistleblower, and certain commercial transactions involving members of her family and the Videocon firm. In order to look into all the claims made against Chanda between April 2009 and March 2018, ICICI Bank formed a panel in June 2018 that was led by retired Supreme Court Justice BN Srikrishna. The investigation indicted her for failing to handle “conflict of interest” and proper disclosure or recusal obligations efficiently, breaking the ICICI Bank Code of Conduct, failing to exercise “diligence” with regard to yearly reports as the bank needed, and so on.
After receiving this report, ICICI Bank made the decision to treat Chanda’s separation as “Termination for Cause”, with all of the severe repercussions that entail revocation of all her current and future entitlements, including unpaid amounts, bonuses, increments, unvested and vested and unexercised stock options, medical benefits, and bonuses paid to her during the investigation period.
Between 2010 and 2012, Dhoot invested Rs 64 crores in Nupower Renewables through Supreme Energy Pvt Ltd (SEPL), and transferred SEPL to Pinnacle Energy Trust. It appears that the transfer occurred only a day after ICICI disbursed the loan.
“This was the first major capital received by NRL (Nupower Renewables) to acquire the first power plant. Chanda Kochhar got illegal gratification, undue benefit through her husband from VIL/VN Dhoot for sanctioning Rs 300 crore loan to VIEL,” alleged the FIR.
According to a CBI probe, Chanda Kochhar authorised extra loans for Videocon from ICICI Bank. Between 2009 and 2011, six loans totalling Rs 1,875 crores were authorised for the Videocon Group and its affiliated firms; in two of these cases, Chanda Kochhar was on the sanctioning committee. Rs 300 crores were given to Videocon International Electronics Limited (VIEL) on August 26, 2009, and Rs 750 crores to Videocon Industries Limited on October 31, 2011.
The loans were reportedly provided in violation of the bank’s established policies and practices. A majority of these loans were non-performing assets, resulting in the loss of Rs 1,730 crores to the bank. ICICI recorded the most number of NPAs under Chanda’s tenure, and according to an RTI response obtained by Pune businessman Prafful Sarda, it had amassed up to an astounding Rs 200,000 crores by 2021. Additionally, Union Finance Minister Nirmala Sitharaman reported to the Parliament that among other institutions, ICICI Bank has written down loans of Rs 42,164 crores.
Following this, Chanda Kochhar contested the judgement passed by Justice Srikrishna and ICICI Bank’s choice to terminate her in the Bombay High Court, and ultimately the Supreme Court. With these changes, her stint in Indian banking came to an end.
Chanda had received several national and international recognitions over the years, including the Padma Bhushan. She had also advised the Indian government on policy matters and was a highly sought-after speaker at national and international events.
Chanda Kochhar’s arrest by the CBI potentially brings a macabre end for what could have been a glorious banking career. Within 16 years of joining ICICI Bank as a trainee in 1984, and advancing to the rank of Executive Director in 2001, she fell into disgrace. The fraud ranks among several high-profile scams that have shaken the Indian banking sector, and places Chanda among a small group of brilliant top women bankers who have fallen victim to a shroud of shame.
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