Sebi favours adjudication of proceedings against ICICI Bank, Chanda Kochhar
26 June 2018
Market regulator Securities and Exchange Board of India (Sebi) has favoured an independent judicial inquiry into allegations of violation of rules in business dealings at ICICI Bank even as the Reserve Bank of India widened a probe into whistle blower revelations about cases of impropriety and lack of transparency under the leadership of its embattled CEO Chanda Kochhar.
Kochhar who has helmed the private sector banking major for almost a decade is on indefinite leave until an independent enquiry announced by the lender’s board to probe alleged cases of impropriety is concluded.
Sebi said a preliminary examination has favoured adjudication proceedings against ICICI Bank and its CEO Chanda Kochhar for alleged violation of listing disclosure norms regarding 'conflict of interest' in business dealings of her husband with Videocon group.
ICICI Bank may face a penalty of up to Rs25 crore under the relevant Sebi regulations for such lapses, while the fine for Kochhar may go up to Rs1 crore, besides other penal actions, according to some reports.
The adjudication process will commence after taking into account the replies to the showcause notices issued by Sebi to ICICI Bank, Kochhar and others in this matter, reports said quoting an ICICI Bank spokesperson.
ICICI Bank’s MD has also reportedly received a showcause notice seeking a response as to why an inquiry should not be held against them under the Securities Contracts (Regulation) Rules. “Documents relied upon under the notice have been received today. Appropriate response to the showcause notice after seeking legal advice would be submitted within the timeline provided,” PTI quoted the spokesperson as saying.
ICICI Bank's board has also constituted an "independent enquiry" and Kochhar has gone on leave till completion of this enquiry, but, the bank said in a regulatory filing last week that Kochhar will continue as MD and CEO until charges against her are proved.
Sebi's preliminary examination findings are based on enquiries made by the regulator in the matter involving Kocchar, ICICI Bank and Videocon Group.
As per the report, Kochhar has said 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-founder and promoters of NuPower.
Further, in June 2009, shares of Dhoot and Pacific Capital (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 has found.
Association of Deepak Kocchar and Videocon has also been confirmed in case of Credential Finance.
Sebi has now concluded that there was conflict of interest in the transactions of ICICI Bank with Videocon.
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, the official said.