Chanda Kochhar Misled RBI About ICICI Bank’s $365 Million Loan To Essar Firm, Claims Report
Former managing director and chief executive officer of ICICI Bank Chanda Kochhar allegedly misled the Reserve Bank of India (RBI) regarding a $365 million loan it gave to Essar Steel Minnesota LLC in 2014, reports The Indian Express.
As far back as July 2014, the central bank had asked questions about ICICI Bank approving a capacity increase for Essar Steel Minnesota’s manufacturing steel pellets project, from 4.1 metric tonnes per annum to 7 metric tonnes per annum.
RBI asserted that the approval meant an ‘ever-greening’ of the loan since a second loan was being disbursed in order to pay off the first loan. It also advised ICICI Bank to classify Essar Steel Minnesota’s debt as a ‘sub-standard asset’.
On its part, ICICI Bank claimed that even though it had green-lighted the capacity increase, it had not forwarded any additional funding to Essar Steel Minnesota.
Records show that this was, however, incorrect, as in June 2014 the bank had, in fact, disbursed a $365-million foreign currency term loan to Essar Steel Mauritius; the money was then used to pay Essar Projects for invoices issued by Essar Steel Minnesota.
Kochhar participated in the credit committee meeting which forwarded the loan. The Essar Group has been one of the largest borrowers of ICICI Bank and received 71 loans from April 2009 to March 2018.
Investigators assert that Kochhar did not meet her fiduciary duty under the Companies Act 2013.