What Does Chanda Kochhar's Arrest Mean?
The arrest could also serve as a warning to broader banking ecosystem against such quid-pro-quo transactions.
Chanda Kochhar, former managing director and chief executive officer of ICICI Bank, was arrested by the Central Bureau of Investigation late on Friday along with her spouse Deepak Kocchar. A special court in Mumbai on Saturday remanded both in the CBI custody till Dec. 26, PTI reported.
The arrest in relation to quid pro quo charges against the former top banker at ICICI is a step in the right direction but investigations also need to be much more swift, according to industry experts BQ Prime spoke with. Kocchar was arrested over four years after she stepped down as CEO of ICICI Bank.
"It should have been triggered long back, this is just the tip of the iceberg," Arvind Gupta, the whistleblower who first raised concerns about dealings between ICICI Bank and Videocon Group, told BQ Prime. If the idea is to inspire public confidence in transparency, accountability, and good governance in the banking sector, the investigations shouldn't take this long, he added.
The whistleblower complaint had alleged that NuPower Renewables, a company owned by Chanda Kochhar's husband, had engaged in a series of suspicious transactions with Venugopal Dhoot's Videocon Group between 2008 and 2013.
The arrest is also likely to serve as a warning to the banking ecosystem against such quid-pro-quo transactions, Shriram Subramanian, founder of corporate governance advisory firm InGovern, told BQ Prime. He concurred that investigations need to move faster than they have and indicated that bottlenecks typically emerge at the judicial level.
"If the judiciary is fast and quick, the investigating agencies will also speed up," he added.
While ICICI Bank's board had expressed that it has placed its "full faith" in Kochhar in March 2018, a few months later they initiated an independent enquiry into the matter.
A panel led by Justice BN Srikrishna had found Kochhar in violation of the bank's code of conduct. Following the panel's report, the bank's board announced that they would terminate Kochhar's services, instead of accepting her decision to retire early.
Although Kocchar's arrest could very well remind bankers of the consequences of nefarious dealings, it also isn't an action without precedent—albeit an infrequent one. The CBI and Enforcement Directorate have also registered cases against Yes Bank's founder and Former MD & CEO Rana Kapoor who is currently under arrest.
"This kind of warning has always been there. If there's quid-pro-quo, it goes without saying," VG Kannan, former chief executive of the Indian Banks Association, told BQ Prime. It's unlikely that the arrest in-and-of itself is an additional warning and current credit off-take isn't that heavy on capex yet, he added. 'So, it'd be better to delink the two aspects'.
But investigations across the board also need to be more swift, Kannan said. "It is essential that every investigation should be speeded up and taken to its logical conclusion," Kannan said.