ICICI Bank Loan Fraud Case: A Study

The ICICI Bank Loan Fraud Case in which federal investigative agencies have named Miss Chanda Kochar, former Managing Director (MD) of ICICI Bank, her husband Deepak Kochar, her brother in law Rajeev Kochar and Videocon chief Venugopal Dhoot is taking interesting turn. The Loan Fraud was highlighted by a whistleblower name Arvind Gupta. He has written a letter to the Prime Minister Office (PMO) somewhere in the year 2018. In the letter, he has alleged quid pro quo transaction between ICICI Bank (headed by Chanda Kochar) and Venugopal Dhoot, head of Videocon. The gist of the allegation made by Mr Arvind Gupta was that certain loan amounts to the tune of Rs 600 Crore ( approx figure) were sanctioned by ICICI Bank in favour of Videocon company with Chanda Kochar being head of the Sanctioning Committee. As a result of this loan sanction, Gupta alleges that Venugopal Dhoot transferred the ownership of NuPower Renewables to Deepak Kochar, the husband of Chanda Kochar for Rs 64 Crore. Gupta alleges that this is just once incident of fraud committed by Chanda Kochar. As a result of this particular loan incident, ICICI bank suffered huge loss as these loan amounts turned into bad loans. Gupta alleges criminal breach of trust against Chanda Kochar and also the violations of provisions of Prevention of Corruption Act, 1988. As per the Supreme Court Judgment, the bank employees (whether public or private) are “Public Servant” within the meaning of Prevention of Corruption Act, 1988. Arvind Gupta further alleges that the same modus operandi was adopted by Chanda Kochar in granting loans on quid pro quo basis as a result of which ICICI Bank suffered huge losses. Gupta demanded a full fledged enquiry. After sitting over the letter for one year, Government asked the federal agencies to conduct investigation. Both Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) have registered respective FIRs after conducting preliminary investigation. The ED had provisionally attached the properties of Kochars under the Prevention of Money Laundering Act, 2002. The Kochars have also been summoned to ED Office in Mumbai for questioning. As far as stand of ICICI bank was concerned, initially it refuted the charges made against Kochar but due to huge public pressure, it set up an internal inquiry committee headed by Justice B N Sri Krishna, former Supreme Court Judge. The Krishna committee indicted Chanda Kochar for loan fraud case in its report and substantially found the allegation of Arvind Gupta to be true. As a result, the ICICI Bank has treated the resignation of Chanda Kochar from the post of Managing Director as dismissal for the service forfeiting all the privileges granted to her. The Kochars have moved Bombay High Court against ICICI Bank. On the other hand, CBI and ED is conducting investigations and trying to connect all dots before they file charge sheet against Kochars and Dhoot. It will be interesting to see how the case unfolds. But one thing is certain, the case reflects the fact that our corporate governance standard in Banking sector is not up to mark to prevent such kinds of fraud and conflict of interest where huge amount of public money is involved both in form of equity and debt.

Dr. Amit Bhaskar, Associate Professor, Unitedworld School of Law (UWSL)

Disclaimer: The opinions / views expressed in this article are solely of the author in his / her individual capacity. They do not purport to reflect the opinions and/or views of the College and/or University or its members.

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