ICICI BANK SCAM CASE :-
INTRODUCTION:
It says that earning money is easy but saving it is very tough. For this a person tries various ways to save their hard-earned money. To accumulate money, some keep money in savings accounts, fixed deposit and some invest in mutual funds or share markets. A good investor has a deep knowledge of the financial strategy, philosophy and position of the company where the funds are invested. By maintaining this process, investor protects himself and the entire company from future risks.
WHAT WAS THE SCAM?
In India there was a man who saved the entire country from financial risk by proper examination and side by side made whistleblower in detecting a big scam in India. Dr Arvind Gupta has emerged as the informer in the alleged ICICI Loan Fraud. ICICI bank is the most famous bank and has earned the trust of many people in India. But there was a time when ICICI bank had to embarrass itself in front of whole India. This happened when Arvind Gupta exposed the curtain of Rs. 3250 crore scam in India. The whole incident led to the downfall of Indian banking system.
The story began in 2016 when he alleged about a Rs. 3,250 crore loan agreement which ICICI Bank extended to Videocon in 2012. In his vlogs, he stated that the loan agreement between these two parties were illegal. He also said that MD Chanda Kochhar and her husband Deepak Kochhar of ICICI Bank with the Chairman of Venugopal Dhoot, both have created a big scam behind the curtains which Indian Govt. and RBI couldn’t even know about this.
Both parties used to have a friendly relation and for this without fulfilling any credit formalities and in greed of monetary and non-monetary benefits, MD Chanda Kochhar misused her authority in extending a loan of Rs. 3250 crore to Venugopal Dhoot in spite of knowing that Videocon Group would never be able to repay this loan. But words of Arvind Gupta were ignored by the Indian Govt, RBI and other banking stake holders. His efforts did not get any success.
Another whistleblower revealed many things over alleged malpractices by top administration of ICICI Bank in 2018 indicating MD Chanda Kochhar about the loan malpractices. When Chanda Kochhar found out that she would be caught for the scam, took an early retirement during that situation. This was accepted by ICICI Bank and also gave her benefits for early retirement.
In March, 2018 again an inquiry has been made where Chanda Kochhar’s name came regarding the alleged scam of Rs. 3250 crore made years back. By abiding the rules of RBI Act, the ICICI Bank cancelled Chanda Kochhar’s early retirement and terminated her from the prestigious position. Mrs Kochhar was disentitled from all retirement benefits after the termination. After that ICICI’s decision was challenged by Chanda Kochhar in the Bombay High Court. Apart from the fact that the person Chanda Kochhar, who received the Padma Bhushan award was accused of such a bad scam, became a shocking news for the whole India.
Indian Govt. transferred this case to CBI and ED for further investigation. After that CBI IN 2019 held Chanda Kochhar, Deepak Kochhar and Venugopal Dhoot liable with companies of Nu Power Renewables, Supreme Energy and Videocon Industries Ltd. An FIR was registered against the IPC for criminal conspiracy and the Prevention of Corruption Act. After this, one by one the scams by Kochhar’s and Venugopal Dhoot started getting exposed. In Dec, 2022 all the three parties were arrested and all their assets were seized by ED.
HOW CAN SUCH SCAMS BE AVOIDED IN FUTURE?
Apart from the ICICI Bank scam, many other banking frauds have been caught in India and for this the Indian banks have to bear lakhs and crores of losses for this fraud. This type of frauds can be prevented by PER that is Prevention Early Detection and reporting of loan frauds. Due to loopholes in the Indian banking system, the ICICI Bank, RBI and SEBI didn’t know how 3250 crores were being scammed from the Indian financial market.
RBI formed an Internal Working Group (IWG) to act as a surveillance system to prevent such frauds in future. This group of RBI provides time to time consultation to the Indian banking system on topics like loan and credit policies. It provides incentives to bank staffs reporting such loan frauds. Apart from banking staffs, Auditor and Chartered Accountant help in preventing the banking scams.
To mitigate the banking scams, every business entities should have a corporate governance and ethics. Corporate governance is the system of rules, practices and processes by which a firm is directed and controlled. If we do a deep analysis of ICICI Bank, it is crystal clear that Chanda Kochhar influenced the loan sanction committee and passed loans for personal benefit, defines her morally and corrupt behaviour. If such scams need to be prevented in near future, then Indian Govt, RBI AND SEBI with different stakeholders should ensure to implement the practice of Corporate Governance. Management should evaluate ethical skills of all employees at regular intervals.
CONCLUSION
Through this ICICI Bank case study, we noticed how an eagle-eye investor, Arvind Gupta discovered the biggest scam of ICICI Bank. There was a time when whole of India was proud for Chanda Kochhar’s success and today that person is only in jail. On the other hand, electronic appliances company, the chairperson of Videocon which was once used by every houses, was sent to jail for the offence of money laundering. But has justice been delivered to Indian investors and bankers just because they went to jail? Such loan frauds ultimately bring losses to common citizens. Today also so many lakhs and crores of rupees have been declared NPA by banks. The ICICI Bank case highlights the importance of accountability, transparency and regulatory oversight in the banking sector. It also underscores the need for continued vigilance and reforms to prevent similar scams in the future.
AUTHOR: RUPSA MAJUMDER, STUDENT OF B.A.LLB (HONS)
COLLEGE: DEPARTMENT OF LAW, HAZRA (CALCUTTA UNIVERSITY)
