Board Could Have Conducted A Deeper Inquiry Into Videocon Loans, Says Former ICICI Bank Chairman N Vaghul

Board Could Have Conducted A Deeper Inquiry Into Videocon Loans, Says Former ICICI Bank Chairman N Vaghul

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Loans given by ICICI Bank Ltd. to the Videocon group were a consolidation of existing loans, said the lender’s former Chairman Narayanan Vaghul in an interview to BloombergQuint. Vaghul, however, agreed that the bank’s board could have considered a deeper external inquiry into the matter in the interest of good governance.

The bank’s board felt no further need for an inquiry based on their own investigations, and hence, they came out with the statement, Vaghul told BlooombergQuint. “The board, however, could have easily done a deeper check on the matter,” Vaghul said.

Reports have alleged that business dealings between Chanda Kochhar’s husband Deepak Kochhar and the Videocon Group led to a quid pro quo in the form of loans given by ICICI Bank to Videocon Industries. In a statement issued last week, the board denied any conflict of interest. The board also said that the loan of Rs 3,250 crore granted by ICICI Bank to Videocon Industries was part of a consortium loan agreement involving 20 banks.

Vaghul said that the bank did not grant any fresh loans to the Videocon Group in 2012. Existing loans were consolidated in 2012, he said, adding that “the loans will be fully provided for and will be taken to the bankruptcy proceedings in the normal course.” Vaghul added he would rather wait for the CBI’s inquiry to be completed before making a judgement on whether there was a conflict of interest involved.

Vaghul suggested that the bank put all facts in the public domain to help clear the air. “That will to some extent be taken care of by the CBI’s preliminary inquiry,” Vaghul said.

The bank’s former chairman added that it is important to distinguish between the bank’s position and Chanda Kochhar’s position.

So far as the bank is concerned, it is a normal loan which has been given. It has been aggregated and given as part of the consortium. It has become bad and will be dealt with as any other bad asset. I don’t think Kochhar’s involvement in anything is going to effect ICICI Bank’s functioning. So far as Kochhar’s connection is concerned and your point that they could have gone for an external inquiry, I suppose there is a point in what you say. But having now reached a point where the CBI has started a preliminary inquiry, they have to finish it and come out with a statement.

N Vaghul, Former Chairman, ICICI Bank

Shares of ICICI Bank declined as much as 6.5 percent, the most since August 2017, yesterday. They were trading 1.8 percent higher today at Rs 266.55 at 10.19 a.m.

[“Source-bloombergquint”]