ICICI Bank faces questions from its key shareholders
MUMBAI: Large shareholders of ICICI Bank Ltd have sought clarifications from the lender’s management about the alleged governance failures in India’s second largest private sector bank, said three people aware of the matter.
Separately, Fitch Ratings said that ICICI Bank’s reluctance to announce an independent probe relating to allegations of potential conflicts of interest in grant of loans to Videocon Group has created doubts over the strength of its corporate governance practices.
“We have had some meetings with the bank on concerns whether there was any conflict of interest in granting these loans, whether the board was aware of these conflicts and if they were, what (then) did the board do. We have also raised concerns on the possibility that the current CEO may step down. So far the bank has assured us that there was no conflict of interest and the CEO has the backing of the board,” said a fund manager on condition of anonymity.
The Central Bureau of Investigation had registered a preliminary enquiry to probe an alleged nexus between Videocon and ICICI Bank CEO and managing director Chanda Kochhar’s hus- band Deepak. In a March 28 stock exchange filing, the bank reposed its faith in Chanda Kochhar and said there was no question of a “quid pro quo”.
A top official with an Indiabased large institutional investor also said it is engaged in discussions with ICICI Bank officials on this issue. “It was a completely informal one-on-one meeting with a top official. During their discussion, we asked him about the recent controversy. The official said that it was a March 2016 issue, the bank’s board had reviewed it and it found no wrongdoing in the matter. He didn’t comment on the bank’s future action,” this person said, on condition of anonymity.
ICICI Bank did not reply to emails seeking comment.
“ICICI being a private bank, the decisions about handling allegations of wrongdoing will be handled by the board of directors, which plays a supervisory role, RBI as the regulator and investigating agencies. If any criminality is found, the investigating agencies will deal with it. The government has only a minority stake in the bank. The question of demands for forensic audit too will be decided by the bank,” a finance ministry official said on condition of anonymity.
Since March 23, ICICI Bank shares have risen 1.69%, lagging the Bankex’s 6.01% gain. ICICI shares on Monday closed little changed at ₹280.45.
(Gireesh Chandra Prasad in New Delhi contributed to this story.)