ICICI Bank’s board on Wednesday scotched rumours of any favouritism, nepotism or quid pro quo in the sanction and disbursement of loans to the Videocon Group. The board also expressed full confidence and faith in the leadership of its MD and CEO Chanda Kochhar.
The board met against the backdrop of concerns that resurfaced over the sanctioning of loans to debt-laden Videocon Industries.
In the context of “some malicious and unfounded rumours in the past few days casting insinuations on the bank and its MD & CEO, the board reviewed the internal processes for credit approval and found them robust”, according to a statement by ICICI Bank, which is India’s largest private sector bank by consolidated assets.
“The larger exposures are approved by the Credit Committee of the board. The majority of Credit Committee members are independent directors of the bank. The Chairman of the credit committee, till as late as June 2015, was always a non-Executive Director.
“Based on the above, it can be concluded that there are adequate checks and balances in loan appraisal, rating and approval processes within the bank, both from the control as well as from a governance perspective,” the statement said.
While emphasising that no individual employee, whatever be his or her position, has the ability to influence the credit decision, the board recorded that the bank’s current exposure to the Videocon Group was part of a consortium lending arrangement, where it was not the lead bank.
The statement said the Credit Committee, which sanctioned facilities aggregating about ₹3,250 crore to the Videocon Group in 2012, was chaired by the then chairman of ICICI Bank and it included independent and working directors of the bank.
“It is important to note that Chanda Kochhar was not the chairperson of this committee. The terms and conditions offered for these loans are similar to those offered by the other banks in the consortium, ruling out the possibility of any special benefit to the borrower by ICICI Bank,” it added.
The statement underscored that all banks, including ICICI Bank, disbursed the Rupee Term Loan into the common escrow pool account being maintained for this purpose by the lead bank.
In 2012, a consortium of over 20 banks and financial institutions sanctioned facilities to 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 approximately ₹40,000 crore.
“ICICI Bank’s share of the banking sector’s exposure to the Videocon Group was less than 10 per cent while around 90 per cent of the loans were sanctioned by other banks and financial institutions,” the statement said.
The bank clarified that none of the investors of NuPower Renewables, promoted by Chanda Kochhar’s spouse Deepak Kochhar, are borrowers of ICICI Bank