RBI found no quid pro quo in ICICI loans to Video­con

Financial Chronicle - - COMPANIES - PRESS TRUST OF IN­DIA

The Re­serve Bank of In­dia had two years back con­ducted a de­tailed scru­tiny to probe al­le­ga­tions of im­pro­pri­ety in ICICI Bank ex­tend­ing loans to Video­con Group but found no proof of any "quid pro quo" or re­cip­ro­cal ben­e­fits, ac­cord­ing to RBI doc­u­ments.

The RBI had un­der­taken a scru­tiny in mid-2016 af­ter the Prime Min­is­ter's Of­fice re­ferred to it al­le­ga­tions of ICICI Bank CEO Chanda Kochhar's hus­band, Deepak reap­ing wind­fall gains from his as­so­ci­a­tion with busi­ness­man Venu­gopal Dhoot, whose Video­con Group is a large debtor to ICICI.

The RBI, in its first re­sponse, some­time in midJuly of 2016, stated that ICICI Bank had sanc­tioned a loan of Rs 1,730 crore to the Video­con Group in 2012 as part of a debt con­sol­i­da­tion pro­gramme un­der­taken through a con­sor­tium of banks led by the State Bank of In­dia, ac­cord­ing to the doc­u­ments and sources with di­rect knowl­edge of the mat­ter.

It went on to state that it was dif­fi­cult to es­tab­lish any con­flict of in­ter­est in the sanc­tion­ing of the loan but flagged that it was not able to

de­ter­mine the sources of fund­ing in some of the trans­ac­tions in­volv­ing Deepak Kochhar's re­new­able en­ergy ven­ture NuPower.

The source of fund­ing was crit­i­cal for as­cer­tain­ing the le­git­i­macy of NuPower trans­ac­tions, the RBI had said, adding that it was for in­ves­tiga­tive agen­cies to as­cer­tain that.

Later in De­cem­ber that year, RBI gave a de­tailed re­sponse to al­le­ga­tions of "quid pro quo" in loan sanc­tioned to the Video­con Group in 2007-08 and 2012, say­ing

ICICI Bank was a part of the debt re­cast pro­gramme of Rs 20,195 crore by a con­sor­tium of banks led by SBI, where ICICI Bank's share was Rs 1,750 crore.

RBI stated that 'quid pro quo' could not be es­tab­lished as ICICI Bank had to take a share like other banks in the con­sor­tium, they said.

The cen­tral bank said the trans­fer of own­er­ship of NuPower Re­new­ables , which Deepak had set up with Dhoot fam­ily in De­cem­ber 2008, by Video­con

was an un­re­lated event out­side the bank­ing do­main. Such a trans­fer can only be ex­am­ined by Sebi (Se­cu­ri­ties and Ex­change Board of In­dia) or min­istry for cor­po­rate af­fairs (MCA).

On the in­vest­ment in NuPower com­ing from Mau­ri­tius, the RBI had stated that the funds had come un­der the au­to­matic route and re­ported to the cen­tral bank and no vi­o­la­tion was re­ported.

Ac­cord­ing to the RBI pa­pers, the cen­tral bank had left it to the de­part­ment of fi­nan­cial

ser­vices in the min­istry of fi­nance to in­ves­ti­gate if there was a non-dis­clo­sure of re­lated party trans­ac­tion or if there were FEMA (For­eign Ex­change Man­age­ment Act) vi­o­la­tions.

The RBI, how­ever, raised ques­tions over the own­er­ship of the Mau­ri­tius-based en­tity, First Land Hold­ing, which had in­vested Rs 325 crore in NuPower.

Also, there was no clar­ity over the al­leged Rs 64-crore loan (unse­cured fully con­vert­ible deben­tures) given to NuPower by Supreme En­ergy, which was 99.99 per cent owned by Video­con chief Venu­gopal Dhoot at that time.

While Chanda Kochhar sat on the credit com­mit­tee that ap­proved the loan to Video­con, there are al­le­ga­tions of con­flict of in­ter­est in her hus­band's brother, Sin­ga­pore-based Ra­jiv Kochhar, per­form­ing debt-re­struc­tur­ing work on er­rant cor­po­rate bor­row­ers from ICICI, in­clud­ing Video­con. The re­struc­tur­ing wasn't com­mis­sioned by the bank but by the bor­row­ers.

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