The Securities and Exchange Board of India (Sebi) has initiated an enquiry into the controversial Rs 32.5-billion loan sanctioned to the Videocon group by ICICI Bank, to check for possible lapses in disclosure and corporate governance norms.
According to sources, the regulator has sought documents from the private sector lender on decisions of its board of directors on the loan. Sebi wants to know if the board was aware about the conflict of interest involving its managing director and chief executive officer, Chanda Kochhar.
Sebi is also keen to know the stance of the independent directors when the board had approved the loan's restructuring.
"The prime objective is to ensure timely and accurate disclosure of all information that is material to investor decisions, under Sebi's Listing Obligations and Disclosure Requirements (LODR) rules," said a person privy to the development.
An e-mail sent to ICICI Bank by this publication did not elicit a response.
The regulator suspects there could have been lapses on the timely disclosure norms by the bank. The entire controversy has caused volatility in the stock price. Shares of ICICI had dropped to Rs 262 on April 2.
The regulator is said to have also asked ICICI if the shareholders and board members was being apprised about the Central Bureau of Investigation's preliminary enquiry (PE) in relation to the alleged quid pro quo in the loan. The PE, registered in February, named Chanda Kocchar's husband, Deepak Kochhar, and Videocon group chairman Venugopal Dhoot. An Arvind Gupta had been repeatedly asking for a probe, saying Chanda Kochhar seemed to have misused her position to promote her spouse's business.
Soon after the CBI move, ICICI had on March 28 told the bourses that its board had reviewed the bank's internal processes for credit approval and found these robust. The board also expressed 'full faith and confidence' in Chanda Kochhar.
In 2012, the bank had said, a consortium of around 20 banks and financial institutions sanctioned facilities to the Videocon group (Videocon Industries and 12 of its subsidiaries/associates as co-obligors), for a debt consolidation programme and for the group's oil and gas capital expenditure programme aggregating to about Rs 400 billion.
It said ICICI was not the lead bank for this consortium and only sanctioned its share of facilities, amounting toy Rs 32.5 billion, less than 10 per cent of the total consortium facility in April 2012. On Kochhar, the bank denied all the allegations, saying there was no question of any quid pro quo, nepotism or conflict of interest.
CBI is ascertaining facts on the allegation that Dhoot gave money to an entity promoted by Deepak Kochhar and two of his relatives ,six months after the Videocon group received the Rs 32.50 bn loan from ICICI in 2012.