‘Allegations on ICICI pose risk for reputation’

Fitch will closely monitor developments, and would take appropriate rating action if risks to the banks’ reputation and financial profile were to rise considerably, it said in a statement. 

The allegation relates to a $500 million loan to Videocon Group, whose controlling shareholder co-founded a separate company with the spouse of ICICI’s CEO Chanda Kochhar. A significant portion of the loan has since become non-performing. 

ICICI Bank’s board has denied any wrongdoing, highlighting that the loan was underwritten in accordance with the bank’s credit standards and was extended as part of a consortium involving over 20 banks. 

The bank has stressed that it has not given any credit to the borrower group outside of the consortium. “The presence of the bank’s CEO on this credit committee - 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. 

Fitch believes corporate governance at private banks, like ICICI, is stronger than at stateowned banks due to better-qualified board members and more professional management.