An Indian Express investigation report has recently raised serious questions about the conduct and ethical practices of ICICI Bank (IBN) and its CEO – Chanda Kochhar. At first glance, the transactions described throughout the saga seem too fishy, to avoid misrepresentation. But that is still an assertion. Let's go into the details.
Note that the content of the report is similar to the details in a shareholder letter to the Indian Prime Minister in 2016, and it can be read here.
There is something fishy about this story  There are three protagonists in this story. They are ̵
1; Venugopal Dhoot, an Indian industrialist and the owner of Videocon Group, Chanda Kochhar, the CEO of ICICI Bank, and her husband, Deepak Kochhar. The story begins at the end of 2008 and continues as follows.
December 2008: Deepak Kochhar founded a unit called NuPower Renewables in a 50/50 partnership with Venugopal Dhoot.
January 2009: Dhoot sells his entire stake in NuPower to Deepak Kochhar for 0.25 million INR. (The question is why? That's less than a month after joining Kochhar.)
March 2010: NuPower receives a loan of INR 640 million from a company called Supreme Energy that belongs to Dhoot. By the end of March, Kochhar will transfer most of its stake in Supreme Energy, which now owns 94.99% of NuPower.
November 2010: Dhoot transfers all of his shares in Supreme Energy to a partner named Mahesh Chandra Punglia
April 2012: The ICICI Bank sanctions a loan as part of a consortium Amount of INR 32.5 billion to Dhoot's Videocon group.
September 2012-April 2013: Punglia transfers all of its shares in Supreme Energy to Pinnacle Energy by Deepak Kochhar for INR 0.9 million.
In summary, a company owned by Dhoot INR 640 million lent to a company owned by Deepak Kochhar and within a few years, through a tortuous path, Kochhar became the owner of the credit company. At about the same time, the Dhoot Videocon Group was granted an INR 400 billion ($ 6.5 billion) loan from a consortium led by ICICI Bank, headed by Kochhar. This loan was classified as NPA in 2017. By the time of the NPA announcement, an unbelievable 86% of the loan remained unpaid. While the ICICI bank was exposed to less than 10% (INR 3,250 billion) to the deal, questions about the CEO's ethical behavior are hard to ignore. Note that Chanda Kochhar was also part of the credit committee that granted this loan.
The defense of ICICI Bank: a symptom of malaise?
Surprisingly, the ICICI Bank has issued a statement that Chanda Kochchar does not prescribe to withdraw from the committee that approved the loan. Anything that does not violate the law can still violate ethical behavior, and it is the belief that the company has decided to make that case. If these transactions are considered acceptable, the company's ethical standards are clearly low, raising the question of whether it was an isolated incident.
Use of banks in return between Indian politicians and corporations Big shots are widely used in the country's state-owned banks. Such dubious corporate governance standards have a direct impact on value. The combined market capitalization of all state-owned banks, once the backbone of the Indian banking system, fell to that of a private lender – HDFC Bank (HDB).
Decline in a bank like ICICI and their decades-long timeline simply raises the question of whether even private companies are now hiding too many skeletons in their closet. Especially with ICICI Bank, investors should consider a serious re-evaluation of the risk profile of the stock before taking any positions on it.
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