Arrested last week ICICI BankThe sacked chief executive of Chanda Kochhar Explains that private sector bankers are accused of crimes of moral turpitude and intentionality Fraud Not immune to harsh punitive state action, the industry’s investigative agency’s action underscores the need for impeccable governance standards among private lenders.
“It is an unspoken rule that public sector and private sector bankers are treated differently when accused,” a senior banker told ET on condition of anonymity. “But these are things of the past now.”
So far, most studies have focused on quid-pro-quo financial deals, nepotism and Corruption Sometimes state-run lenders are accused of favoring certain businessmen.
But the arrests Kochar And her husband, besides changing the story, surprised a section of the bankers.
“Top managements, especially boards in private banks, have to be very careful now,” said the banker quoted above. “Now the same rules apply to both sets of banks.”
The arrest surprises some bankers
In 2016, the Supreme CourtIn a landmark judgment, it held that officers of private banks are public servants for the purposes of the country’s flagship anti-corruption law – Prevention of Corruption Act (PCA), 1988. However, the arrests surprised some bankers.
“It is a sudden arrest. I was surprised when I heard about it because the case has not progressed much in the last two-three years,” said the banker, who did not want to be named. “Even if you look at the allegations made by the CBI against the Kochhars, I am not sure the agency has a strong case against them.”
The Videocon path
Chanda Kochhar and her husband Deepak Kochhar were arrested by the Central Bureau of Investigation (CBI) last week. ICICI Bank to Videocon Group Companies. A special court in Mumbai on Saturday ordered the CBI to remand the duo till December 26.
The CBI alleged that Kochhar caused a loss of ₹1,730 crore to ICICI Bank, and the proceeds of the scam included ownership of high-value flats and other illegal financial gains.
“It took more than four years for the police to arrest the Padma Bhushan award-winning private sector banker who allegedly committed such brazen irregularities,” said Hemindra Hazari, analyst at Independent Bank. “I feel that even the erstwhile ICICI Bank team, which supported her when the scandal broke out, is also at fault here, although they dropped her unchallenged when the matter became unacceptable.”
The origin of the controversy lies in whistle-blower allegations against Kochhar and others Commercial Transactions between his family members and the Videocon Group. The ICICI Bank group decided to institute a personal inquiry in May 2018, after which Kochhar went on leave. In October 2018, the bank accepted his request for early retirement and agreed to make some concessions.
In January 2019, an internal investigation by ICICI Bank alleged that Kochhar had violated disclosure norms on conflict of interest and that his departure in October 2018 would not be considered an ordinary resignation but a dismissal.
Since Kochhar’s exit from ICICI Bank, there has been a major change in internal processes, governance structures and disclosures at private sector banks, senior bankers say.
“Today, top managements are very careful and internal compliances have been significantly strengthened because they know that a wrong call can create a dent in their credibility,” said another banker. “If you see, the incumbent ICICI Bank is reaping the benefits of the re-rating after the management has openly announced plans to bring in reliable processes, strengthen underwriting and improve governance.”