Sebi to start personal hearings in probe against ICICI Bank, Kochhar this month

Both ICICI Bank and Chanda Kochhar have replied to the show-cause notices issued by the Sebi after almost three months

By: ENS Economic Bureau | Mumbai | Updated: September 8, 2018 1:10:58 am
Sebi to start personal hearings in probe against ICICI Bank, Kochhar this month Securities and Exchange Board of India

Capital Market regulator Securities and Exchange Board of India (Sebi) will soon start personal hearings as part of adjudication proceedings against ICICI Bank and its MD and CEO this month for alleged violation of disclosure requirements under securities law in the case involving Videocon group and NuPower Renewables, a company run by Chanda Kochhar’s husband Deepak Kochhar.

Both ICICI Bank and Chanda Kochhar have replied to the show-cause notices issued by the Sebi after almost three months. Interestingly, both ICICI Bank and Chanda Kochhar told the Sebi in separate replies that they were not aware of the dealings between Deepak Kochhar and the Videocon group. Sebi issued the notices on May 24, 2018 under Rule 4(1) of SCR (Procedure for Holding Inquiry and Imposing Penalties by Adjudication Officer) Rules 2005 asking responses on matter relating to alleged non-compliance with certain provisions of the erstwhile Listing Agreement and the Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Chanda Kochhar had informed Sebi that she was not aware about the Videocon group’s investment in Deepak Kochhar’s company. When contacted by The Indian Express, ICICI Bank did not comment on the replies sent by the bank and Kochhar to Sebi.

As first reported by The Indian Express on March 29, Videocon group promoter Venugopal Dhoot provided crores of rupees to NuPower Renewables Pvt Ltd (NRPL), a firm he had set up with Deepak Kochhar and two relatives six months after the Videocon group got Rs 3,250 crore as loan from ICICI Bank in 2012. He transferred proprietorship of the company to a trust owned by Deepak Kochhar for Rs 9 lakh, six months after he received the loan from ICICI Bank. The Videocon account was declared an NPA or a bad loan in 2017.

According to Sebi rules, if, after considering the cause, the adjudicating officer is of the opinion that an inquiry should be held, he should issue a notice fixing a date for the appearance of that person either personally or through his lawyer or other authorised representative. While holding an inquiry under this rule the adjudicating officer will have the power to summon and enforce the attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document which in the opinion of the adjudicating officer, may be useful for or relevant to the subject matter of the inquiry.

“It is a very difficult situation which puts anybody into a questionable conduct. Chanda Kochhar is probably on a weaker position than the board of the bank because even if she really did not know (about her husband’s business) very few people will be ready to buy the argument. On the other hand the board will find more takers for such an argument unless there could be proof that board was aware and was being pressured to take decisions”, said JN Gupta, managing director of Stakeholders Empowerment Services, a proxy advisory firm.

Last month, the bank in its US SEC filings said that CBI has launched a preliminary enquiry against various individuals and firms including “unknown officers and/or officials” of ICICI Bank. The bank also said its audit committee has instituted an independent enquiry, headed by a former Supreme Court judge, BN Srikrishna, to consider various allegations relating to Chanda Kochhar, who is on a leave of absence pending the outcome of the independent enquiry. The enquiry supported by an independent law firm and a forensic firm is currently under way, said the bank.

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