‘No criminal conspiracy or abuse of power’: CBI’s closure report in favour of NDTV’s former directors Prannoy, Radhika Roy

The Central Bureau of Investigation (CBI) had alleged that in 2008-09, Prannoy and Radhika along with RRPR Holding Pvt Ltd entered into a criminal conspiracy with unknown officials of ICICI Bank and violated section 19(2) of the Banking Regulation Act.

Section 19(2) of the Banking Regulation Act, 1949, states that “no banking company shall hold shares in any company, whether as pledgee, mortgagee or absolute owner, of an amount exceeding thirty per cent”.

As per the central probe agency, in furtherance of the conspiracy, ICICI Bank advanced a loan of Rs 375 crore and allegedly took the entire shareholding of the erstwhile promoters in NDTV (61 per cent) as collateral. It was also alleged that the interest rate on the loan was reduced from 19 per cent to 9.5 per cent which allegedly cost the bank Rs 48 crore.

However, the CBI in its closure report submitted that the reduction of interest rates was not an isolated incident and the bank had reduced the interest rates in 83 loans from 2007 to 2010.

“Regarding loss of Rs 48 crores to ICICI Bank and corresponding gain to promoters of NDTV, it is stated in the cancellation report of CBI that there was no collusion or criminal conspiracy or abuse of official position by any public servant or officers of ICICI bank, reduction of rate of interest from 19% to 9.65% as approved on 05.08.2009 for repayment of the loan was based on various factors like the borrower’s inability, timely payment, continued weak financial performance of NDTV, volatile share price, etc. As such, such reduction of rate of interest was not one of incidence…”, the order noted relying on the cancellation report.

The CBI also submitted that the sanctioning of the Rs 375-crore loan to RRPR Pvt Ltd was not an isolated case and ICICI Bank had been extending such loans to other similarly rated (BB rating) companies as well.

“Loan proposal of RRPR was assigned BB Rating but loan was sanctioned and disbursed by ICICI Bank as value of 8400 crores of loan has been sanctioned to borrowers of BB and below rated borrowers during financial year 2008-09 and 2009-10…”, the order stated relying on the CBI’s closure report.

The CBI had also submitted that the loan was not in violation of Section 19(2) of the Banking Regulation Act.

“As regard the allegation that loan has been given in violation of Section 19(2) of Banking Regulation Act and Master Circular dated 28.08.1998 of RBI, it is stated that RBI clarified that sanctioning of the loan under NDU-POA arrangement does not amount to pledge as RBI guidelines do not prohibit granting of advances against primary security of shares to cooperate. Bank has financed in about 30 cases under NDU-POA arrangement upto October 2009 and the total loans of those 30 borrowers was up to Rs 15,000 crores. Additionally, the bank has financed 65 borrowers under NDU-POA,” the order stated, pointing out the CBI’s conclusions.

NDU-POA which stands for ‘non-disposal undertaking-power of attorney’ is an agreement which prevents the disposal of the shareholding of a company by the persons holding the shares.