Allegations against Kochhar to hurt business, says ICICI

ICICI Bank has said that the ongoing enquiry against its MD and CEO Chanda Kochhar could lead to further scrutiny and additional costs, denting its reputation.

The Audit Committee of the bank had instituted in June an independent enquiry, headed by former Supreme Court Judge B N Srikrishna, to probe various allegations against Kochhar.

These relate to nepotism, quid pro quo and her not disclosing conflicts with regard to transactions between Videocon group and entities controlled by her husband Deepak Kochhar.

"We are at increased risk for inquiries or investigations by regulatory and enforcement authorities, which may adversely affect our reputation, lead to increased regulatory scrutiny, cause us to incur additional costs or adversely affect our ability to conduct business," ICICI Bank said in a US SEC (Securities and Exchange Commission) filing dated July 31, 2018.

Pending the enquiry, Kochhar is on a leave of absence since June 19, 2018 and in the interim the bank has appointed Sandeep Bakshi as the Chief Operating Officer, who directly reports of the board. The allegations have been levelled against Kochhar through media articles, a whistleblower and complaints written by a private individual to senior government officials and regulators, ICICI Bank said.

The country's largest lender in the private sector also informed SEC that India's capital market regulator SEBI has issued a showcause notice to Kochhar and to the bank in May this year related to these allegations.

"The bank is in the process of responding to the relevant allegations in the notice which pertain to the bank. The Central Bureau of Investigation (CBI) also initiated a preliminary enquiry against various individuals and firms including unknown officers and/or officials of the Bank," it said.

With relation to the anonymous whistle-blower complaint of March 2018 alleging incorrect asset classifications from fiscal year 201516 and earlier, the bank said that an internal audit was conducted and an interim report was submitted to RBI.

"Based on the Interim Report and review undertaken for additional loan accounts, the bank has concluded that the likely impact of these allegations is not material to the financial statements for the year ended March 31, 2018 or earlier periods reported in this annual report," it said.

The bank said since April, it has implemented enhanced internal controls, relating to review of loan accounts which satisfy certain threshold parameters, relating to size, credit rating and days-past-due, for identification of NPAs.