A veteran banker told ET on condition of anonymity, “It was an unspoken rule that there were different actions taken by government agencies in cases of alleged crimes committed by public and private sector bankers.” “But these are things of the past now.”
So far, most investigations have been based on quid-pro-quo financial deals, nepotism and Corruption State-run lenders have sometimes been accused of favoring certain traders.
but the arrest of Kochhar And her husband has surprised a section of bankers besides changing the narrative.
The banker quoted above said, “The top management in private banks and especially the boards have to be very cautious now.” “The same rules now apply to both sets of banks.”
The arrest surprises some bankers
In 2016, the Supreme courtIn a landmark judgement, it held that executives of private banks were public servants for the purposes of the country’s premier anti-corruption law – Prevention of Corruption Act (PCA), 1988. Still, there was an element of surprise for some bankers in the arrests.
A banker said on the condition of anonymity, ‘It was a sudden arrest. I was surprised when I heard about it, because this matter has not progressed much in the last two-three years. “Even if you look at the allegations leveled against the Kochhar family by the CBI, I am not sure the agency has a strong case against them.”
videocon Way
Chanda Kochhar and her husband Deepak Kochhar were arrested last week by the Central Bureau of Investigation (CBI) in a case of alleged fraud and loan irregularities. ICICI Bank to Videocon Group companies. A special court in Mumbai on Saturday sent the two to CBI custody till December 26.
The CBI has alleged that Kochhar caused a loss of ₹1,730 crore to ICICI Bank and the fraudulent proceeds included ownership of a high-value apartment and other illegal financial gains.
Independent banking analyst Hemendra Hazari said, “It took more than four years for the police to arrest a reputed private sector banker, who is a Padma Bhushan awardee, for allegedly committing such irregularities.” “I think the erstwhile ICICI Bank board that stood by him in the face of the scandal is also at fault here, although they unceremoniously removed him when the matter became untenable.”
The genesis of the controversy lies in the whistle blower’s allegations against Kochhar and some Business Transactions between his family members and Videocon Group. The ICICI Bank board decided to initiate a private inquiry around May 2018, following which Kochhar went on leave. In October 2018, the bank accepted his request for early retirement and agreed to provide certain benefits.
In January 2019, an internal probe by ICICI Bank reportedly found that Kochhar had violated disclosure norms on conflict of interest and that her exit in October 2018 would be treated as a dismissal, not a normal resignation.
Senior bankers say that since Kochhar’s departure from ICICI Bank, there has been a sea change in the internal processes, governance systems and disclosures of private sector banks.
Another banker said, “Today, top managements are extremely cautious, and internal compliances have become much tighter, because they know that one wrong call will affect their credibility.” “If you see, currently ICICI Bank is again enjoying rating advantage, as the management has openly conveyed its plans to bring in credible processes, strengthen underwriting and improve governance.”