ICICI Bank Ltd. has, in a regulatory filing to the US Securities and Exchange Commission (SEC), highlighted the ongoing investigation into the allegations against MD and CEO Chanda Kochhar as one of several risk factors to the bank. India’s third-largest lender by assets also warned international shareholders that it is staring at a potential ‘reputation’ risk and likely ‘regulatory scrutiny’.
Furthermore, the lender admitted, for the first time, that the Central Bureau of Investigation (CBI) has initiated a preliminary enquiry against some of its officers, but did not disclose the names of those being probed or the charges levelled against them.
ICICI Bank’s filing, the Form 20-F document, made to the US markets watchdog on 31 July 2018, stated: “The Audit Committee of the Bank under direction given by the Board of Directors has instituted an independent enquiry, headed by a former Supreme Court Judge, Hon’ble Mr. Justice B. N. Srikrishna (Retd.), to consider various allegations relating to the MD and CEO, Ms. Chanda Kochhar. The allegations have been levelled against Ms. Kochhar through media articles, a whistleblower complaint, and complaints written by a private individual to senior government officials and regulators.
A file photo of Chanda Kochhar, MD & CEO, ICICI Bank. ReutersA file photo of Chanda Kochhar, CEO, ICICI Bank. Reuters
“The allegations include nepotism, quid pro quo and claims that Ms. Kochhar, by not disclosing conflicts of interest caused by certain transactions between certain borrowers of the Bank and entities controlled by Ms. Kochhar’s spouse [Deepak Kochhar], committed infractions under applicable regulations and the Bank’s Code of Conduct. The independent enquiry is supported by an independent law firm and a forensic firm. The independent enquiry is underway.
“In addition, SEBI issued a show-cause notice to Ms. Kochhar and to the Bank in May 2018 related to the allegations. The Bank is in the process of responding to the relevant allegations in the notice which pertain to the Bank.
“The Central Bureau of Investigation (CBI) also initiated a preliminary enquiry against various individuals and firms including unknown officers and/or officials of the Bank.
“Ms. Kochhar is on a leave of absence while the independent enquiry takes place. In the interim, Mr. Sandeep Bakhshi has been appointed as Chief Operating Officer, subject to approval of the Reserve Bank of India, and reports directly to the Board of Directors during her absence.”
Earlier in July, the private sector lender reportedly ordered an external probe into the complaints it received about 31 loan accounts from an anonymous whistleblower in March. The troubled bank has mandated law firm Panag & Babu to look into the allegations that claim it inflated profits by at least $1.3 billion over a period of eight years by delaying provisioning for 31 non-performing asset (NPA) accounts.
A preliminary enquiry (PE) is conducted to determine if there is enough evidence of wrongdoing for a case to be taken up for detailed investigation. If sufficient evidence suggests that a cognizable offence has been committed, then the PE is converted into a regular case or a first information report (FIR).