ICICI Bank Imposes Rs2 Lakh Penalty on Rama Bijapurkar; SEBI Probing Share Purchase for Violation of Insider Trading
Moneylife Digital Team 24 January 2022
On 5 January 2022, when the trading window was closed, there was a purchase of 4,900 shares of ICICI Bank in the account of Rama Bijapurkar, who was an independent director (ID) of the Bank. On 20th January, she submitted her resignation as ID from the Bank. The next day, ICICI Bank imposed a penalty of Rs2 lakh on her for an infraction of the Bank’s code and the Securities and Exchange Board of India (SEBI) regulations. This was after a confirmation from the Bank’s Audit Committee. A news report says the share purchase by Ms Bijapurkar when the trading window was closed is being probed by the market regulator.
 
According to the report from the Economic Times, SEBI observed that Ms Bijapurkar bought 4,900 shares of ICICI Bank worth Rs38.60 lakh on 5 January 2022, when the trading window was closed ahead of the Bank’s December quarter results.
 
In a regulatory filing, ICICI Bank confirms, “We reliably understand from our ID, Ms Bijapurkar, that her independent financial adviser purchased 4,900 equity shares of the Bank in her account without prior intimation to her when the trading window was closed viz., on 5 January 2022. The Audit Committee of the Bank was notified of this incident.” 
 
“Based on Ms Bijapurkar’s submission, it is concluded that this was an inadvertent trade made without any intent to violate the Bank’s Code on Prohibition of Insider Trading (Bank’s Code) or the SEBI (Prohibition of Insider Trading) Regulations, 2015 (SEBI Regulations). However, as there was an infraction of the Bank’s Code and the SEBI Regulations, a penalty of Rs2 lakh has been imposed on the ID upon confirmation by the Audit Committee at its meeting held on 22 January 2022 and the said amount shall be remitted to Investor Protection Education Fund (IPEF) in accordance with the SEBI Regulations,” the lender says.
 
In this case, according to market observers, ICICI Bank has been lax in speedy disclosure of the insider trading violation. “It (ICICI Bank) should have brought it out when the resignation was announced. Let us raise all the questions and seek a fair investigation by SEBI. ICICI Bank should publish the internal board evaluation in the interest of transparency,” says one of them.
 
In a letter written on 20 January 2022, Ms Bijapurkar tendered her resignation as ID of ICICI Bank. The next day, ICICI Bank informed the exchanges about the resignation of the market strategy and consumer economy consultant.  
 
In the resignation letter, she says, “I have recently been given to understand by management that my teaching activity in the area of the market and business strategy at an educational institution with which I am associated and my research activities on India’s consumer economy at a not for profit research centre with which I am associated, which may require me to occasionally engage with other financial service companies or the investor community, could be in violation of the conflict of interest policy of the Bank and the regulator, even in the event of no direct remuneration being earned.” 
 
“In order to avoid any possible ambiguity on my position at any future date as a result of these activities, I have decided to step down. The effective date of my resignation is 23 January 2022 and I want to confirm that there is no other material reason for my resignation other than the one mentioned above,” Ms Bijapurkar says.
 
As per SEBI (Prohibition of Insider Trading) Regulations, 2015, designated persons and their immediate relatives cannot trade in securities when the trading window is closed. As per the regulations, all employees who have access to ‘unpublished price sensitive information (UPSI)’ are identified as ‘designated employees’.
 
We sent an email to ICICI Bank for their comment and would update this article as and when we receive any reply from the lender. 
 
Ms Bijapurkar is also ID of the board of directors of six other companies, including Mahindra & Mahindra Financial Services Ltd, Nestlé India Ltd, VST Industries Ltd, Cummins India Ltd, Sun Pharmaceutical Industries and Apollo Hospitals Enterprise Ltd.
 
She has also served on governing councils of entities like Banking Codes and Standards Board of India (BSCBI), Insurance Information Bureau, IIM Ahmedabad, on the eminent person advisory group to the Competition Commission of India (CCI), and has been a fellow of MasterCard Centre for Inclusive Growth and Centre for Emerging Market Economies, Fletcher School.
 
Comments
pgodbole
4 months ago
ICICI Bank says "We reliably understand from our ID, Ms Bijapurkar, that her independent financial adviser purchased 4,900 equity shares of the Bank in her account without prior intimation to her when the trading window was closed viz., on 5 January 2022"! Bravo! Now IFAs are trading in clients' account without informing them and without their knowledge! Does the bank or Ms. Bijapurkar believe this will wash? Bank is as much responsible (for hiding) as Ms. Bijapurkar (for violation).
cgpkumar
4 months ago
Greed is an impulse that even IDs may find it difficult to resist.
d.hemant0814
4 months ago
When such ID's have highly qualified advisors, how can they make such blunders, and call it as an inadvertent error. There are checks and balances in various statutes, requiring disclosure of interest. If the ID , through its advisor had made an inadvertent error, then how did the company register this transfer in ID's name? Generally the transfer gets registered on T+2 cycle basis. If the shares were purchased on January 5, 2022, how did this fact of purchase come to the notice of the Board, after nearly a fortnight, remains unanswered. SEBI should de register this purchase & disgorge the purchaser of these shares. Why do these events happen only in case of ICICI? earlier he matter with respect to Ms Chanda Kochar is before the judicial authorities, now a new matter has come up.
ibidelhi
4 months ago
Madam should resign from all companies ,where she is ID.
saharaaj
4 months ago
This is off balance sheet gift to most independent directors .. for .. Look who sponsored her director ship ?
msubbaraomr
4 months ago
I am a minority share holder. This kind of shenanigans have to stop and directors made to pay the price. ?2 Lac penalty does not do commensurate justice. SEBI must debar her from holding directorships and initiate criminal proceedings. Does our Law allow it and how do as shareholders make her/Directors accountable?
brajesh.nath
Replied to msubbaraomr comment 4 months ago
yes, very true. Its a case of abuse of position and she should have been barred from holding directorship in any undertaking for some years.Time to make directors accountable. Even the tone of her letter of resignation bears the brazenness and unapolegetic attitude on her part.
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