“Appropriate responses would be submitted to Sebi by the bank in accordance with regulations,” the statement said.
The regulator has appointed an adjudicating officer to examine the potential contravention of securities laws.
The notice was served under Sebi’s (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, under which the adjudicating officer can summon and enforce the attendance of any person acquainted with the facts and circumstances of the case.
The move follows Sebi’s preliminary enquiry in the matter where it had sought documents from the private sector lender on decisions of its board of directors on the loan.
“The regulator is of the opinion that there are grounds to initiate adjudication proceedings in the case to investigate any possible conflict of interest involving Chanda Kochhar. At present, there isn’t sufficient information to establish any irregularities in the alleged business dealings,” said a source privy to the development.
J N Gupta, managing partner at proxy firm Stakeholder Empowerment Services said, “It appears that we may see some serious outcome. The rule states that the regulator can hold inquiry based on the preliminary findings. If the adjudicating officer finds securities laws violations, the bank and related entities would be served show cause notice and could be penalised as per the provisions.”
Sebi had initiated the preliminary enquiry to know whether the bank’s board was aware about the conflict of interest and also the stance of the independent directors when the board had approved the loan. Besides, the regulator is also probing any possible lapse in timely disclosures by the bank. It had asked the bank if the shareholders and board members had been apprised of the Central Bureau of Investigation’s probe in relation to the alleged quid pro quo in the loan that ICICI Bank gave to Videocon, and Videocon’s investment in NuPower Renewables.
The CBI had registered the preliminary enquiry in February and had named Deepak Kochhar and Videocon group Chairman Venugopal Dhoot. Soon after the CBI move, ICICI Bank had on March 28 told the bourses that its board had reviewed the bank’s internal processes for credit approval and found these robust. In the statement, the bank’s chairman MK Sharma said the board had ‘full faith and confidence’ in Chanda Kochhar.
The statement also said that ICICI Bank was not the lead bank for the consortium and had only sanctioned its share of facilities, amounting toy Rs 32.50 billion, less than 10 per cent of the total consortium facility in April 2012. On Kochhar, it denied all the allegations, saying there was no question of any quid pro quo, nepotism or conflict of interest. The CBI is ascertaining the evidence of corruption as Dhoot allegedly gave money to NuPower, six months after the Videocon group received the Rs 32.50-billion loan from ICICI Bank in 2012. The income tax department is probing the nexus between Videocon, NuPower and its related foreign entities.