ICICI Bank faces risk to its reputation after allegations of wrongdoing against Chief Executive Officer Chanda Kochhar, Fitch Ratings said on Monday. The global ratings agency said it is doubtful about the strength of corporate governance at the private bank, PTI reported.
“An investigation into allegations that India’s ICICI Bank extended a loan with a potential conflict of interest raises questions over the bank’s governance and creates reputational risks,” the ratings agency said.
The comments from Fitch come after questions were raised over a Rs 3,250-crore loan ICICI Bank sanctioned to the Videocon Group in 2012. Videocon Group CEO Venugopal Dhoot allegedly provided crores of rupees to a company founded by Chanda Kochhar’s husband six months after the group got the loan. The loan was part of the Rs 40,000-crore loan that Videocon secured from a consortium of 20 banks.
The Central Bureau of Investigation has initiated a preliminary inquiry to determine whether ICICI Bank violated any law in sanctioning the loan.
“The presence of the bank’s CEO on this credit committee [that approved the loan], and the bank’s reluctance to support an independent probe, have, in our opinion, created doubts over the strength of its corporate governance practices,” Fitch said, adding that the investigation would undermine the confidence of investors.