ICICI Bank’s Loan Impropriety Case: US’s Probe begins, SEBI’s penalty guidelines

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ICICI Bank and it’s MD and CEO Chanda Kochhar, have been in the limelight lately due to the Videocon Group Loan Case. The Securities and Exchange Board of India (SEBI) and the CBI had already been involved in the investigations when US’s Securities and Exchange Commission (SEC) joined them in the probe a day ago.

THE CHANDA KOCHHAR LOAN IMPROPRIETY CASE:

The case involves allegations of an alleged tax evasion by the Venugopal Dhoot owned-Videocon group, pertaining to the Rs 3,250 Crore loan given to it by ICICI bank in 2012.
The angle that brings in Ms. Chanda Kochhar is that the Income Tax Department is investigating a flow of Rs 325 crore from two Mauritius-based firms, First Hand Holding Limited and DH Renewables Holding Ltd.,
to Mr. Deepak Kochhar’s (Chanda Kochhar’s husband) company, NuPower Renewables Pvt. Ltd.
The case was brought forth by investor and whistle-blower Arvind Gupta, who alleged a ‘quid pro quo’ in the Rs 3,250 crores and the Rs 660 crore loans to the Videocon Group.
His case was based on the fact that a similar 10 percent foreign funding made it’s way to NuPower Renewables at a questionable time coincidence.
Investigations also searched several links related to Mr. Nishant Kanodia, son-in-law of Essar Group co-founder Ravi Ruia, and owner of the involved Mauritius-based companies.
Gupta further claimed that the Essar Group had allegedly received undue favours for “round tripping” investments Kochhar’s NuPower Renewables.
SEBI had issued a notice to the Bank, seeking response to it’s alleged non-compliance to certain market regulatory provisions.

ICICI BANK’S RESPONSE :
The Bank also held an independent probe after receiving a notice from SEBI last month. The Bank has constantly been defending the CEO whenever questioned by the media.

US PROBE:
US market regulator SEC joined the probe recently since ICICI Bank is also listed in the US.
PENALTY:
A report by Mint claimed that under the current order, all SEBI can do is impose a Financial Penalty. It has no power to ask ICICI Bank’s top executive to step down.

A maximum penalty of Rs 25 Crores or three times the ill- gotten gains can be levied. However in Chanda Kochhar’s case, the amount of penalty will be decided by the adjudicating officer at his own discretion.

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Article Name
ICICI Bank's Loan Impropriety Case
Description
US's SEC begins probe in the ICICI Bank loan impropriety case. SEBI's guidelines about possible penalty for Ms. Chanda Kochhar.
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BulletinXp

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