Sebi favours legal action against ICICI Bank, CEO
NEW DELHI: A preliminary examination by regulator Sebi has favoured adjudication proceedings against ICICI Bank and its chief executive officer (CEO) Chanda Kochhar for alleged violation of listing disclosure norms regarding ‘conflict of interest’ in business dealings of her husband with Videocon group.
ICICI Bank may face a penalty of up to ₹25 crore under the relevant Sebi regulations for such lapses, while the fine for Kochhar may go up to ₹1 crore, besides other penal actions, a senior official said.
The adjudication process will convene formally soon after taking into account the replies to the show-cause notices issued by Sebi to ICICI Bank, Kochhar and others in this matter, the official added.
Besides Sebi probe, ICICI Bank’s board has also constituted an “independent enquiry” and Kochhar has gone on leave till completion of this enquiry. According to a regulatory filing by the bank last week, Kochhar will continue as managing director and CEO, though the group’s life insurance arm head Sandeep Bakshi has been appointed as a whole time director and COO.
Bakshi will report to Kochhar and will handle the day-to-day operations in her absence. The bank has maintained that its board has full faith in Kochhar.
According to regulatory sources, Sebi’s preliminary examination findings are based on enquiries made by the regulator in the matter involving Kocchar, ICICI Bank and Videocon Group. As per the report, Kochhar has admitted that her husband Deepak Kocchar has had many dealings with Videocon Group over the last several years.
Besides, it has also been admitted by her that Deepak Kocchar and Venugopal Dhoot were co-founder and promoters of NuPower.
Further, in June 2009, shares of Dhoot and Pacific Capital (owned by Deepak Kocchar’s father and sister-in-law) in NuPower were sold to Supreme Energy. Also, Dhoot continues to hold interest in NuPower through debentures of ₹64 crore, subscribed through Supreme Energy, the regulator found.
Association of Deepak Kocchar and Videocon has also been confirmed in case of Credential Finance.
On the basis of the preliminary report, Sebi has concluded that there was conflict of interest in the transactions of ICICI Bank with Videocon. By not disclosing the details of her husband’s dealings with Videocon, Kochhar has not complied with the provisions of listing agreement.
Further, the bank also failed in ensuring that its directors comply with listing rules, the official said. Therefore, adjudication proceedings have been recommended against ICICI Bank and Kochhar, he added.