Kochhars’ business links with Videocon dates back to early 1990s at least
Contrary to media statements, family of Chanda Kochhar, Managing Director (MD) and Chief Executive (CEO) of ICICI Bank and Venugopal Dhoot owned Videocon group, had shared business relations for the past 24 years, at least. The relationship between brothers Deepak and Rajiv Kochhar and Videocon group dates back to 1994-95. Check the below article from Sucheta Dalal published on 15 April 1996 in The Times of India. 
 
The article says, "Starting with a modest net income of Rs17.04 lakh in 1992-93, it saw a quantum leap income to Rs9.36 crore the very next year. In 1994-95, this little company raised a hefty Rs1,200 crore of short term funds for its clients. In 1994-95, it placed 10 lakh equity shares at Rs90 per share with the Videocon group. Videocon's finance director SK Shelgikar is on Credential's Board."
 
Interestingly, Credential Finance, which was set up as Bloom Field Builders and Construction Co Ltd, did not disclose all such details in its red herring prospectus and still managed to get listed on the bourse. Credential Finance, last traded in 26 December 2001 on the BSE. The records from BSE show the company was 'compulsory delisted' on 23 August 2017.
 
 
According to a report from Mint, Ms Kochhar and six members of the family held shares in Credential Finance, along with Videocon. “A total of seven members of the Kochhar family—including Chanda Kochhar, her husband Deepak Kochhar and his brother Rajiv Kochhar—together held a 2% stake in Credential Finance, its shareholding pattern for that year (2001) filed with the Registrar of Companies (RoC) in 2007 showed. In the same year (2001), Venugopal Dhoot’s Videocon International Ltd held 17.74% and its associate firm Joy Holdings held 0.8% in Credential Finance. Another major shareholder was Mahesh Chandra Punglia, holding 0.8%,” the report says.
 
Punglia, who was employee of Videocon and later provided consultancy to the group, was questioned by the Central Bureau of Investigation (CBI) in the ICICI Bank-Videocon loan case. Since 15 January 2009, Punglia is also a Director in the NuPower Renewables Pvt Ltd, the company founded by Mr Deepak Kochhar, husband of the ICICI Bank chief.
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COMMENTS

Abhijit Gosavi

9 months ago

You’re what they call a canary in the mine! I’m pretty sure it’s not easy to find a journalist of your integrity in India.

Mahesh S Bhatt

9 months ago

Purana Match fixed abhi pakda Mahesh

Krishnan Hariharan

9 months ago

ICICI Bank is supposed to be a role model for both PS and private sector banks! The recent exposures reveal even this pace setter is untrustworthy. The CEO should come out clean or step down if allegations prove right (which seems to be the case). God save our financial institutions.

Veeresh Malik

9 months ago

For every borrower gone bad loan or NPA, there are 1000s or lakhs of depositors who are left carrying the loss. Our bankers in India appear to have forgotten this basic simple fundamental as they continue to take us for granted.

So - what is a "bad loan" or "NPA" in India and why are our Indian bankers so hell-bent on protecting people who have gone bad-loan or NPA?

A "bad loan" or "NPA" in India is defined as the sum product of systematic collusion between the Three Bs (Banker, Borrower, Bureaucrat) working in synchronisation with each other to shaft the other Indians.

At one time, bad loans/NPAs could be paid back to some extent as the rupee kept going weaker and weaker, generating more rupees for forex stacked abroad, but the real estate crash as well as stronger rupee put an end to that.

Now that's not possible and more than anything else, the concept of an escape route in the hands of the bankers has been removed, to the point that a very senior person in the finance line was telling me how the buzz is that there is no value in post-retirement posts in the loan re-structuring game anymore.

So why would our Bankers object to new rules imposed post Nirav Modi wherein they now have the powers to start recovery proceedings as per a set sequence?

Samjha karo. What will be the value of a job in banking if everything is done as per a system? Who will bring gifts for wedding of their children any more?

Amazing, this attitude by the caretakers of our money!!

K C Gangadhar

9 months ago

Awesome work by Sucheta Dalal. The fig leaves are coming off one by one. How long before the ICICI Board decide to dump?

D S Ranga Rao

9 months ago

So, obviously, the long-standing and the deep rooted nexus between the ICICI bankers, their relatives and the Videocon has been well established beyond any doubt. Why delay in bringing the case to its logical conclusion, including recovery of the lost funds?

Deepak Narain

9 months ago

Something fishy is there , no doubt. It remains to be seen how the wrong-doers will manage to escape. If investigation will be done honestly and sincerely, many more worms will be found. The ultimate test is recovery of the lost public money. The culprits should be put behind bars and stopped from influencing the investigation.

S Santhanam

9 months ago

Stepping down from the position of CEO is simply avoiding any criminal prosecution. Due diligence followed by forensic audit of her connection with videocon and her husband and other loans extended during her tenure should be done.

Onkarnath Adiga

9 months ago

You are genius until you are caught for wrong doings. Held in awe as lady chairperson of ICICI Bank, the reality is grim and of concern with respect to corporate governance. God help this country.

ashok s

9 months ago

The other day Mr Deepak told that his his wife has no idea about Vinod involvement in Nupower company. the article has nailed the matter that vinod of videocon was associated with her husbands ventures.Mrs Chandakochar should step down forth with as ICICI shares ave alreadry lost its value and the concerned should make good the loss to
its shareholders

Rajendra Ganatra

9 months ago

The nexus is clear. Chanda Kochhar's knows her time is up. I am surprised that she is still clinging. Behind every failed woman there is a man!

Hussain Ali

9 months ago

If top corporates and bankers as of such people follow unethical practices, I believe it's high time for India's financial structure and der regulatories.

PRAKASH D N

9 months ago

The more ICICI and Chanda Kochar want to hide, more and more it reveals. Where is the corporate governance in ICICI and Axis which P J Nayak committee highlighted as a virtue of private Banks gone. It is
high time Ms. Chanda Kochar steps down from the post and facilitate a transparent enquiry. When SC has ruled that the acts of top management in pvt. Banks also attract the Prevention of Corruption Act, why CVC is keeping quiet. What prevents CBI in taking swift actions. This will be a test case for NDA Govt. to prove what it means by transparency and good governance.

REPLY

Balakrishnan S

In Reply to PRAKASH D N 9 months ago

She won't unless forced or sacked.
Bec as ceo she can use her office to whitewash and close the investigation-money,influence of third parties,etc.

RBI defers implementation of Ind AS for scheduled commercial banks
The Reserve Bank of India (RBI) released its first monetary policy statement for FY2018-19 on 5 April 2018 (‘Policy Statement’). The statement sets out various developmental and regulatory policy measures for the financial sector. It aims at strengthening regulation and supervision; broadening and deepening financial markets; improving currency management; promoting financial inclusion and literacy; and, facilitating data management.
Some of the major issues from the Policy Statement have been discussed below:
 
Deferment of Indian Accounting Standards (Ind AS) implementation
 
The Ministry of Corporate Affairs (MCA), Government of India had notified the Companies (Indian Accounting Standards) Rules, 2015 on 16 February 2015. MCA had also issued a Press Release dated 18 January 2016  outlining the roadmap for implementation of International Financial Reporting Standards (IFRS) converged Indian Accounting Standards (Ind AS) for banks, non-banking financial companies (NBFCs), select All India Term Lending and Refinancing Institutions and insurance entities.
 
Banks were advised to take note of the press release which stated that notwithstanding the roadmap for companies, the holding, subsidiary, joint venture or associate companies of banks shall be required to prepare Ind AS based financial statements for accounting periods beginning from 1 April 2018 onwards, with comparatives for the periods ending 31 March 2018 and thereafter. The press release further provided that NBFCs having net worth of rupees five hundred crore or more and their holding, subsidiary, joint venture or associate companies, if not covered specifically, are required to comply with the Ind AS for accounting periods beginning on or after 1 April 2018. Accordingly, Scheduled Commercial Banks (SCBs), excluding regional rural banks (RRBs) and Insurer or Insurance Companies, were required to implement Ind AS from 1 April 2018. 
 
It was also clarified therein that SCBs, NBFCs, insurance companies or insurers shall apply Ind AS only if they meet the specified criteria and they shall not be allowed to voluntarily adopt Ind AS. Though an insurer or insurance company and NBFC are not prohibited from providing Ind AS compliant financial statement data for the purposes of preparation of consolidated financial statements by its parent or investor, as required by the parent/investor to comply with the existing requirements of law. 
 
For banks, however, necessary legislative amendments to make the format of financial statements, prescribed in the Third Schedule to Banking Regulation Act 1949, compatible with accounts under Ind AS, are still under consideration of the government. As a consequence of which, the RBI has deferred the implementation of Ind AS specifically for SCBs excluding RRBs, by one year by when the necessary legislative changes are expected. 
 
Since the said exemption has been notified only for SCBs, the same cannot be inferred to be applicable for other financial entities as well. Therefore, the aforesaid exemption for banks shall not be deemed to be extended for non-banking financial companies (NBFCs) until a specific notification is issued by RBI in this regard. Accordingly, they shall be required to prepare their financial statement in accordance with Ind AS, according to the previously prescribed timelines. 
 
Storage of Payment System Data
 
According to the Policy Statement, recently the payment ecosystem in India has expanded considerably with the emergence of new payment systems, players and platforms. Such systems are highly technology dependent which necessitate adoption of adequate safety and security measures on a continuous basis. The RBI, as a regulator of payment systems in our country, must ensure a healthy pace of growth in digital payments. In this regard the safety and security of payment systems data is fundamental. Further, it is also crucial that the payment system data is continuously monitored to reduce the risks from data breaches.
 
The last financial year witnessed the introduction of a new set of regulations by RBI for monitoring the operations of peer to peer (P2P) lending platforms. As per the said master directions, an NBFC-P2P is required to store and process all data relating to its activities and participants on hardware located within India. 
 
The outsourcing directions issued by RBI also provide for off-shore outsourcing of financial services. The guidelines issued by RBI in this regard specifically state that the activities outsourced outside India by an NBFC shall be conducted in a manner so as not to hinder efforts to supervise or reconstruct the India activities of the NBFC in a timely manner. Further, it mandates the NBFC to maintain all original records in India.
 
RBI had also issued the guidelines for regulating the issuance and operation of prepaid payment instruments (PPIs). The regulations require PPI issuers to maintain a log of all the transactions undertaken using the PPIs for at least ten years at a centralised database. However, the regulations do not specifically provide the location for maintenance of such data.
 
Recently, it has been observed that very few payment system operators and their outsourcing partners store the payment system data either partly or completely in India. In such cases where the data is stored abroad, it acts as a hindrance for the RBI to have an autonomous access to such payment data for supervisory purposes. The spotlight on data security has come at a time when Facebook has faced a global criticism over breach of user data.
 
In order to have an unfettered right to monitor the payment system data, it has now been mandated that all payment system operators shall be required to store the data, relating to the payment systems operated by them, within the country in six months. A potential change for companies with data centers outside India would be to build such centers in India to comply with RBI’s guidelines.
 
The RBI has also issued a directive under Section 10(2) and Section 18 of Payment and Settlement Systems Act 2007 on 6 April 2018. As per the said notification, all system providers, including authorised payment systems and payment banks, are required to ensure that the entire data relating to payment systems operated by them, including the full end-to-end transaction details / information collected / carried / processed as part of the message / payment instruction, are stored in a system only in India. In case required, for the foreign leg of the transaction, if any, the data can also additionally be stored in the foreign country.
 
The RBI has also directed compliance with the aforesaid requirement within a period of six months and upon completion of the requirement the system providers shall report compliance of the same to RBI latest by October 15, 2018. Additionally, a system audit report (SAR) duly approved by the board of the system provider shall also be submitted to the RBI by December 31, 2018. The said audit is to be conducted by CERT-IN empaneled auditors certifying completion of activity. 
 
Introduction of Single Master Form for Reporting of Foreign Direct Investment in India
 
Non-residents make investment in India (Foreign Direct Investment), on a repatriable basis, through eligible instruments such as equity shares, compulsory convertible preference shares, compulsorily convertible debentures, share warrants etc., issued by the investee company or by contributing to the capital of a limited liability partnership (LLP). 
 
Presently, the reporting of the above transactions resulting in foreign investment is in a disintegrated manner across various platforms/modes. RBI intends to introduce online reporting by 30 June 2018 via a single master form which would subsume all reporting requirements, irrespective of the instrument through which the foreign investment is made.
 
Ring-fencing regulated entities from virtual currencies
 
The finance minister had in his Budget speech on 1 February 2018, said that cryptocurrencies are not legal and he affirmed to eliminate their usage. RBI has also repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies. In view of the associated risks, RBI has, with immediate effect, instructed entities regulated by RBI not to deal with or provide services to any individual or business entities dealing with or settling VCs. The services flagged by the RBI include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, among others. The instructions are applicable to all commercial, co-operative banks, payments banks, small finance banks, NBFCs and payment system providers. 
 
Regulated entities which already provide such services shall exit the relationship within a specified time of three months. RBI has also issued a detailed circular in this regard on April 06, 20181.
 
To conclude, it seems that the gradual elimination of crypto-currency dealing through unregulated private entities is a welcome move by the RBI for the ensuing financial year. Further, the Policy Statement brings a relief for the banks by the deferring the applicability of Ind AS. Also, better supervision and monitoring of payment system data shall be ensured by RBI by having access within the county.  
 
(Anita Baid works as Senior Manager at Vinod Kothari Consultants Pvt Ltd)
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COMMENTS

SuchindranathAiyerS

9 months ago

This is yet another classic example of how out of touch the Central Government and the RBI is is with ground realities. Ideas are announced as policies or rules, and then deferred, revised or withdrawn. Very incompetent and slap dash

Fitch downgrades PNB's viability rating to BB-
Following the multi-crore fraud that took place in the bank, Fitch Ratings on Tuesday has downgraded the Viability Rating of Punjab National Bank (PNB) to 'bb-' from 'bb' and has maintained the rating on Rating Watch Negative (RWN).
 
According to a statement from the credit ratings agency, PNB's other ratings are unaffected by this downgrade.
"
"The downgrade follows our assessment of how losses resulting from fraudulent transactions reported in February 2018 will affect the bank's financials, including its earnings and core capitalisation. The downgrade also reflects the bank's risk controls, which we think are weaker than what we had previously believed, since the fraud was undetected for several years and acquired a large scale of $2.2 billion. That said, the bank plans to strengthen its risk control"," the statement said.
 
Soon after the fraud was revealed in February 2018, the Fitch had warned PNB of downgrading its Viability Ratings.
 
A fraud of around $2.2 billion took place in PNB, the second largest in public sector, by diamond trader Nirav Modi and his uncle Mehul Choksi.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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