Chanda Kochhar asked to reply to Sebi show cause notice by July 10

The Securities and Exchange Board of India (Sebi) has set a fresh deadline for ICICI Bank and its managing director and chief executive officer, Chanda Kochhar, to reply to a show-cause notice over alleged violation of listing disclosure norms.

The private sector lender and Kochhar did not respond to the notice by the June 7 deadline, citing lack of documentary proof to support the allegations. Sources said Sebi had provided the lender with relevant documents last week.

The new deadline to respond to the notice is July 10.

The markets regulator served the notice on the bank and its CEO on May 23, for alleged violation of listing disclosure norms regarding ‘conflict of interest’ in business dealings of her husband Deepak Kochhar’s firm, NuPower Renewables, with the Videocon group. Sebi will initiate adjudication proceedings after taking into account their replies.

According to regulatory sources, Sebi shared its preliminary examination findings with ICICI Bank and Kochhar based on the enquiries it made in the matter. The documents have details of transactions between Videocon Industries Chairman Venugopal Dhoot and Deepak Kochhar. Sebi also shared the statements of Dhoot and Chanda Kochhar on the said business dealing. Sources said Sebi in its 12-page notice mentioned that Chanda Kochhar had admitted that her husband had many dealings with the Videocon group over the years. Besides, she said Deepak and Dhoot were co-founder and promoters of NuPower Renewables.

According to the adjudication rules, if the regulator does not get a response from the aggrieved party in a stipulated time period, it could pass an ex-parte order against the entity.

“A company can seek extension as long as there is a genuine reason for it. However, the regulator could go ahead with further action if it finds that this is a time-buying tactic of the company or entity,” said Sandeep Parekh, founder, Finsec Law Advisors.  An email sent to ICICI Bank on the development did not elicit a response.

According to the Sebi notice, shares of Dhoot and Pacific Capital (owned by Deepak Kochhar’s father and sister-in-law) in NuPower Renewables were sold to Supreme Energy. Also, Dhoot continues to hold interest in NuPower through debentures of Rs 640 million, subscribed through Supreme Energy, the regulator found. Besides, the association of Deepak Kochhar and Videocon has been confirmed in the case of Credential Finance. On the basis of the preliminary report, Sebi has concluded that there was a conflict of interest in the transactions of ICICI Bank with Videocon. Meanwhile, Sebi also replaced the adjudicating officer who was initially appointed to probe the matter. Sources said the person concerned was transferred to another department and another officer was appointed. The cases under the scanner include the bank’s Rs 32.5 billion loan to the Videocon group in 2012 and the involvement of Chanda Kochhar’s family in the restructuring of the loan. 

Kochhar and her family are facing allegations of quid pro quo and conflict of interest with respect to a loan extended to certain entities. ICICI Bank’s board has constituted an independent inquiry under former SC judge B N Srikrishna to probe the case. Chanda Kochhar has gone on leave till completion of this inquiry. Kochhar will continue as MD and CEO, though the group’s life insurance arm head Sandeep Bakhshi has been appointed a whole-time director and COO.

The story so far

• April: Sebi initiates preliminary enquiry against ICICI Bank, Chanda Kochhar
• May: Regulator issues show-cause notice for alleged violation of listing norms
• ICICI Bank board orders an independent inquiry under Justice B N Srikrishna
• June: Bank, Kochhar seek time, citing lack of documents 
• Kochhar went on indefinite leave
• Bank appoints Sandeep Bakhshi whole-time director and COO
• Girish Chandra Chaturvedi named bank's non-executive chairman

July: Sebi gives fresh deadline and asks bank, Kochhar to file reply by July 10