News Delhi: Former MD and CEO of ICICI Bank Chanda Kochhar is alleged to have “misled” the Reserve Bank of India (RBI) in 2014 on a $365-million loan granted by the bank to a Mauritius-based holding company of Essar Steel Minnesota LLC, according to media reports.
The central bank had found several “irregularities” in the lending and had raised questions regarding ICICI Bank’s approval for an increase in Essar Steel Minnesota’s project capacity — manufacturing steel pellets — from 4.1 MTPA (metric tonnes per annum) to 7 MTPA.’
As early as July 2014, the RBI had reportedly said that the bank’s approval to extend the commencement time of the pellet project indicated “ever-greening” of loans when the bank was lending a second time to pay off an earlier loan.
Also, the RBI recommended to ICICI Bank that it classify its loan to Essar Steel Minnesota as a “sub-standard asset”, the media reports said. Records reveal that Kochhar, “misled the RBI vide the RBI response by claiming that the bank had not participated in any additional funding required by the change in scope of the Essar Steel Minnesota Project.”
ICICI Bank is one of the largest lenders for Essar Group. Between April 2009 and March 2018, the bank disbursed 71 loans to the group. The bank did not conduct any formal inquiry even after it received an external complaint in 2013 alleging that no financial institution was willing to lend to the group.
Kochhar had been a part of the credit committee meeting that disbursed the loan to the Mauritius company. The ED has summonedChanda Kochhar in the first week of May to Delhi in connection with a money laundering case related to a bank loan fraud, officials said.
They said while Chanda has been summoned for May 3, Deepak and his brother Rajiv have been asked to depose on April 30 before the investigating officer of the case and record their statements under the Prevention of Money Laundering Act (PMLA). The summons were served to them in the last week of April, they added.