Allegations against CEO Chanda Kochhar can affect business: ICICI Bank

Chanda Kochhar
Private lender ICICI Bank said that the allegations against its Managing Director and chief executive officer Chanda Kochhar could adversely impact its ability to do business, in a filing to US markets regulator Securities and Exchange Commission (SEC). Kochhar is facing allegations of conflict of interest and quid-pro-quo in a loan given to the Videocon group.

“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,” said the bank’s filing.

The bank has faced three whistleblower complaints during the year, accusing it of having lax controls over operations. Following the second whistleblower complaint, the bank board appointed former Supreme Court judge B N Srikrishna to probe allegations of conflict of interest against Kochhar. Kochhar is on leave until the investigation is over. The filing did not mention any timeline for completion of the enquiry.

"The media coverage and public scrutiny of our business practices, our board of directors, key management personnel, policies and actions have increased significantly over the past few months," said the bank. “We cannot be certain how these investigations will end and it is possible that the conclusions of our independent investigations plus any regulatory actions could lead to more negative publicity.”

The bank stressed upon the adverse impact that the rising negative coverage is having on its business. “Negative rumours have been previously circulated about our financial position which resulted in concerns being expressed by depositors and higher-than-normal withdrawal levels for a few days.”

While the bank came under SEC’s scanner earlier this month, Securities Exchange Board of India (SEBI) issued a show-cause notice to Kochhar and the Bank in May 2018. The bank is in the process of responding to the allegations. 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.

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