The belated move of the ICICI Bank board to conduct an independent audit into the alleged conflict of interest against managing director and CEO Chanda Kochhar after earlier giving her a clean chit looks like a coverup. The bank management had condemned the “insinuation of conflict of interest”, and said it was “totally baseless and mala fide in intent”. Now it has done an about-turn. The in-house audit was announced soon after the CBI initiated an inquiry into the multi-crore loan given to Ms Kochhar’s husband Deepak Kochhar’s company through a third party, Videocon’s Venugopal Dhoot. With three inquiries against Ms Kochhar simultaneously — by the bank, Sebi and the CBI — the audit move seems an effort to neutralise the outside probes and whitewash or water down the allegations against Ms Kochhar. It may be recalled that she was a member of the loan sanctioning committee and was present when the loan was sanctioned to Videocon, which invested a large part of it in Deepak Kochhar’s company. The bank, however, clarified that Ms Kochhar was present, but didn’t participate in the discussion. She should have, in the interest of good governance, recused herself.
This bank audit seems a routine move when top management is involved — there is an effort to unite and save their own. It’s only lower level staff that get nixed, according to those in the know.
What is shocking is that of the Rs 3,250 crores loan given, Videocon hasn’t returned Rs 2,800 crores and is facing insolvency petitions filed by its lenders before the National Company Law Tribunal for recovery of Rs 13,000 crores. Mr Dhoot is still roaming free, when lesser mortals would be sitting in jail. It is puzzling that Ms Kochhar has not been asked to resign or step down while the inquiry is on. In the case of Usha Ananthasubramanian, chief of Allahabad Bank, the government stripped her of her powers after the CBI filed a chargesheet.
The Kochhar case is yet another instance of banks being amenable to looting by the well-connected as in the case of the chacha-bhanja duo of diamentaire Nirav Modi and his uncle Mehul Choksi of Gitanjali Gems. They looted Indian banks of around Rs 13,000 crores and are safely operating overseas along with a moneyed elite list of fugitives like Vijay Mallya and Lalit Modi.
While public sector banks are under constant scrutiny by various vigilance outfits, and Parliament, private sector banks are deemed above wrongdoing. With the iconic ICICI Bank and another private sector bank like Axis Bank, which saw one of its branches land in trouble over money-laundering during the demonetisation exercise, there is a need to look into the functioning of private sector banks. They are more innovative than public sector banks in evergreening of loans and managing bad loans. Perhaps the RBI needs to keep a closer watch on their functioning.
