One of the India’s most celebrated banker ended her career with a controversial note. In her 34-years career with India’s second largest private bank, she has fought many battles and emerged as one of most powerful woman in Indian Banking sector. She was conferred with Padma Bhushan in 2011 for her immense contribution to India’s growth in Banking sector. She became the role model for many women in Corporate sector.
Moving on the Ladder to Top position:
Ms Chanda Kochhar started her career as management trainee in 1984 in Industrial Credit and Investment Corporations of India after her MBA from Jamnalal Bajaj Institute. In 1990s when it became Bank, she played a key role in setting up the lending business. In 1998, she was promoted to General Manager and oversaw the bank’s top 200 clients which could have potentially included Videocon. In 2000, she was asked to build ICICI’s retail business. She pushed ICICI Bank as a top private sector retails bank and then she was named as Chief Financial Officer and managing director. In 2009, she became the CEO of the ICICI Bank.
In 2008 financial crisis after Lehman Brother’s fall down, it was a rumor of being bankruptcy of ICICI bank. By conserving capital and focusing on credit quality, she made the bank to return profitability and grow to the next level.
The Fall from Grace
The Videocon loan issue was first raised by whistle blower Arvind Gupta in 2016, accusing Chanda Kochhar of conflict of interest & corporate misconduct while sanctioning loans to Videocon. Initially the issue did not get media attention, but in March 2018 it gains the attention after publishing it in Indian Express.
A company owned by Dhoot gave a loan of 64 crores in March 2010 to NuPower Renewables which was jointly promoted by Dhoot & Deepak Kochhar, husband of Chanda Kochhar. The lending company was acquired by a Trust controlled by Deepak Kochhar 6 months after Videocon got the loan from ICICI Bank. The company shares were bought by Kochhar’s trust at a paltry Rs 9 lakh.
Dhoot also sold his 50% stake in NuPower renewables for just Rs 2.5 lakh to Deepak Kochhar. The allegation was the ICICI Bank’s award of loan to Videocon and the loan later becoming NPA in 2017 due to Dhoot’s business relations with Deepak whose wife Chanda Kochhar was the member of the sanctioning committee and CEO of the Bank. Videocon paid hardly 14% of the loan amount to ICICI Bank.
Initially ICICI Board dismissed all the allegation against Ms Kochhar. But due to continuous media glare and questions from investors, the bank set up a panel headed by retired supreme court Justice B N Srikrishna to investigate if Ms Kochhar violated the bank’s rules with regards to conflict of interest (section 215, contracts act) & internal lending in June 2018. Mr Kochhar took the leave since then and offered resignation in Oct 2018.
On January 30, the committee submitted the report and alleges former MD & CEO Chanda Kochhar for violating the Bank’s code of conduct in Videocon Loan case. Following the report, the bank’s board said it will treat her separation as ‘termination for cause’ under the internal policies. It is decided to claw back the bonus of around Rs 10 crore which was paid to her between 2009 to March 2018 along with blocking her close to Rs 340 crore of ESOP (Employee stock ownership plan) (as per section 220 in contracts act).
‘I am utterly disappointed, hurt and shocked by the decision. I have not been given a copy of the report. I reiterate that none of the credit decisions at the bank are unilateral. ICICI is an institution with established robust processes and systems which involve committee based collective decision making with several professionals of high calibre participating in the decision making,” she said.
CBI booked her on charges of criminal conspiracy, cheating and abuse of official position for dishonestly sanctioning loans of Rs 3250 crores to Videocon Group. One week after registering the FIR, CBI also issued lookout notices against her, Mr Deepak Kochhar & Videocon group promoter Venugopal Dhhhot.
Later she was also alleged with irregularities in transactions with Avista advisory group which is owned by her brother in-law, acquisition of her current family residence linked to Videocon group, the sales of ICICI building at low cost to Videocon group, Mauritius connection of NuPower, inflated profit by delaying provisioning of non-performing assets.
References:
https://www.moneycontrol.com/news/business/the-rise-and-fall-of-chanda-kochhar-3014131.html
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