ICICI is a test case in private banking fraud

The charges made against the former ICICI bank chairman Chanda Kochhar, her husband Deepak and businessman Venugopal Dhoot of Videocon read like a litany of top level white collar racketeering crimes by which the conspirators benefited at the cost of the bank. It is distressing that a bank chairman should be involved in such crimes committed through quid pro quo deals that have been laid bare by the investigators into the scandal involving a loss of at least Rs 1,730 crore to the bank. There is no reason to believe that the investigating agency will not pursue the matter to its logical end in the court and try to extract the maximum punishment possible for financial shenanigans in playing with money belonging to the common Indian bank depositor. The scheming exposed in the transactions of the companies started by her husband and the businessman appears damning enough for the trial to be expedited and a verdict delivered as soon as possible.

It is another matter that the somewhat discredited central agency, which is itself going through an existential crisis now, should have handled this in such a loud and public manner. Having made the preliminary enquiries and gathered the evidence, the CBI should have exercised some restraint in bringing the charges up before a court and awaiting the verdict rather than place the evidence as if for a public trial. No one holds a candle for conspirators in corporate boardrooms, however high-profile they may be, helping themselves to millions in public money. But by making the case as if they want the people to be the judge and jury, the agency is only likely to cause needless panic about the whole system of Indian banking. While there is no bar in going after the top people attempting corporate frauds, certain discretion is required when it comes to dealing with a sensitive sector like banking.

The case may appear cut and dried as presented as the quid pro quo evidence and so even for an agency with a poorish record in proving cases beyond reasonable doubt and obtaining sentences commensurate with the crimes. However, the ICICI Bank case must not descend into a witch hunt involving the virtual who’s who of the banking sector whose names are now in the public domain with regard to facing the investigators for corruption and fraud in lending. Faith in the banking system has already been severely hit by the huge crisis of NPAs and outright fraud as in the Nirav Modi-Choksi diamonds case. A few top public sector bankers have been convicted and spent time in jail for corrupt or reckless lending, which also contributed to the several lakh crores of public money that had to be written off and the bank capital that had to be replenished. Private sector lenders too must follow every guideline applicable to lending and the prominent case of the woman bank chief may serve as a warning to bankers. But do follow due process and prove it beyond doubt in the court.