Videocon loan issue: ICICI Bank explores consent option with Sebi

A consent application is typically filed when the aggrieved party wants to settle the case without the main hearing

ICICI Bank has intensified efforts to settle the alleged conflict of interest issue involving Managing Director and Chief Executive Officer Chanda Kochhar with the Securities and Exchange Board of India (Sebi). The bank's newly-appointed chairman, Girish Chandra Chaturvedi, met Sebi chief Ajay Tyagi on Monday and discussed how the matter could be resolved, said people with direct knowledge of the development.   

Chaturvedi showed his intention to file a consent application with the capital markets regulator to end the ongoing probe into the Videocon loan matter, they said. 

A consent application is typically filed when the aggrieved party wants to settle the case without main hearing in exchange for a lesser charge or for a more lenient sentence and/or dismissal of certain related charges. 

The meeting came amid a fresh deadline of August 24 set by the regulator for the bank and Kochhar to reply to the show-cause notice over alleged violation of listing disclosure norms.  

Last month, ICICI Bank COO Sandeep Bakhshi also met the Sebi chairman and apprised him about the developments in the bank. Bakhshi had briefed him about risk management measures the bank had undertaken to avoid lapses.

"The board doesn't want to drag the case and is, therefore, evaluating the options to settle the matter," said a source.

During the latest meeting, Tyagi is said to have specifically sought an update on the probe being conducted by former Supreme Court judge BN Srikrishna. Sources said Chaturvedi's response was that the Srikrishna panel had appointed law firm Luthra & Luthra to conduct an overall audit to examine the allegations.

The private sector lender also apprised Sebi about the expected timeline to complete the probe. Sources said the panel was looking into ICICI Bank's domestic and overseas transactions and other allegations like quid pro quo. The panel would take a few more months for final submission. Experts said if the probe were to get extended, it would be closer to the end of Kochhar's term in March next year.

Sources say Tyagi showed his displeasure over the investment made by ICICI Prudential Mutual Fund in the initial public offering (IPO) of group firm ICICI Securities. The fund house had allegedly placed a last-minute bid of Rs 2.4 billion to bail out the issue. The regulator had directed to repay the money to the investor and also launched adjudication proceedings against the fund house and other persons involved.

The market regulator served the notice on the bank and its chief on May 23 for alleged violation of listing disclosure norms regarding "conflict of interest" in business dealings of her husband Deepak Kochhar's firm, NuPower Renewables, with the Videocon group. Sebi will initiate adjudication proceedings after taking into account their replies. 

The private sector lender and Kochhar have not responded to the notice yet, citing lack of documentary proof to support the allegations. Later, after Sebi had provided the lender with relevant documents, they sought inspection of the documents under the principles of natural justice.

An e-mail sent to ICICI Bank did not elicit a response.