The Central Bureau of Investigation (CBI) recently filed a case against few, for allegedly cheating ICICI Bank of Rs 1,730 crore.
What is the allegation?
Cases are filed against former ICICI Bank MD and CEO, Chanda Kochhar, and her husband Deepak Kochhar.
The Videocon group managing director, Venugopal Dhoot, and firms run by Deepak Kochhar and the Videocon group are also under CBI's charge.
There is an alleged nexus between the Videocon group and Nupower Renewables Pvt Ltd of Deepak Kochhar.
The CBI has filed charges of criminal conspiracy, cheating and abuse of official position, against Chanda.
Evidence of self benefit or gratification ought to be the basis of a charge of criminal conspiracy and cheating.
The charge, in this case, is of “dishonestly sanctioning loans” to the Videocon group.
The first registered preliminary enquiry is into the sanctioning of the loan aggregating Rs 3,250 crore in 2017 which was declared a bad loan the same year.
How significant is CBI's decision?
There are wider implications arising out of this case which will test the CBI's roles and responsibilities.
It will have a bearing on the CBI’s future anti-corruption drives against private banks especially after the SC's landmark judgement in 2016.
It said that private bankers can be treated on par with their state-owned peers in terms of being public servants under the Prevention of Corruption Act.
A successful prosecution could bolster CBI's credentials at a time when its accountability is under test in many cases.
The other likely impact could be on board governance in banks.
The case highlights the failure on the board oversight and performance front in many of India’s listed firms.
It shows their inability to address the misalignment of the interest of shareholders and that of the management.
What lies ahead?
Now that the CBI has taken the first step, it should take the process forward.
It should ensure that the case does not drag on as seen in multiple instances of bank frauds in India.
But caution should be taken that the move does not lead to bankers adopting an ultra conservative approach to lending.
The implications of such a stance will be serious for financial stability, growth and in turn fiscal consolidation.
