Secusrities Exchange Board of India (SEBI) a regulatory body for preliminary examination has favoured adjudication proceedings against ICICI Bank and its CEO Chanda Kochhar for violating the disclosure list norms regarding ‘conflict of interest’ in business dealings of her husband with Videocon.
Though the bank may face a penalty of up to Rs. 25 crore under the relevant Sebi regulations for such lapses, while the kochhar may be fined up to Rs 1 crore, besides other penal actions as reported by a senior official.
There will be a formal start to the process of adjudication soon after taking the accountancy of replies to the show cause notices issued by Sebi to ICICI Bank, Kochhar and others in this matter.
According to an ICICI Bank spokesperson, the bank and its MD received show cause notice seeking a response as to why an inquiry should not be held against them under the Securities Contracts Rules.
One of the spokesperson said “Documents relied upon under the notice have been received today. Appropriate response to the show cause notice after seeking legal advice would be submitted within the timeline provided.”
Other than Sebi enquiry, an “independent enquiry” has been constituted by the board of ICICI Bank. Whereas Kochhar has gone on leave till completion of this enquiry.
Last week, according to the regulatory filing by the bank, Kochhar will continue as MD and CEO, while Sandeep Bakshi has been appointed as a whole time director and COO who was before the group’s life insurance arm head. In Kochhar’s absence is expected to report her and handle the day-to-day operations.
The bank has shown complete faith in Kochhar with whole board under her operations.
Sebi’s preliminary examination findings were based on enquiries made by the regulator in the matter involving Kocchar, ICICI Bank and Videocon Group.
As per the report, Kochhar has admitted that her husband Deepak Kocchar has had many dealings with Videocon Group over the last several years.
Besides, it has also been admitted by her that Deepak Kocchar and Venugopal Dhoot were co-founders and promoters of NuPower.
Further, in June 2009, shares of Dhoot and Pacific Capital which is owned by Deepak Kocchar’s father and sister-in-law in NuPower were sold to Supreme Energy. Also, Dhoot continues to hold interest in NuPower through debentures of Rs 64 crore, subscribed through Supreme Energy, the regulator found.
On the basis of the preliminary report, Sebi has concluded that there was conflict of interest in the transactions of ICICI Bank with Videocon.
It also says that by not disclosing the details of her husband’s dealings with Videocon, Kochhar has not complied with the provisions of listing agreement. Further, the bank also failed in ensuring that its directors comply with listing rules.
Sebi Chairman Ajay Tyagi had said last week that the regulator was yet to receive a reply from ICICI Bank on the allegations involving Kochhar.
The cases under scanner include the bank’s Rs 3,250 crore loan to Videocon Group in 2012 and the involvement of Kochhar’s family members in restructuring of the loan.
As per Kochhar’s family members, they are facing allegations of quid pro quo and conflict of interest with respect to a loan extended to certain entities.