New Delhi: The Central Bureau of Investigation closed its corruption and fraud case against NDTV founders Prannoy and Radhika Roy not for want of evidence – as was believed earlier – but because it gave a complete clean chit to them on all the charges.
The Wire has accessed the CBI report closing the 2017 criminal investigation into allegations of corruption and conspiracy to cheat and defraud the ICICI bank in foreclosing a Rs 375-crore loan.
The CBI’s investigation has found that there was no wrongdoing in the ICICI bank sanctioning a loan of Rs 375 crores to the Roys’ firm M/s RRPR Holdings Private Limited. The loan which was alleged then to have been in violation of banking laws was a normal business transaction, the CBI found.
Analysing similar loans disbursed by ICICI bank during the same period, the closure report of the CBI investigation said, “This [NDTV loan] was not an isolated case and ICICI Bank has been extending such loan facility to other similarly rated companies.”
‘About 30 cases…’
The report also had an RBI clarification and the acknowledgement that several such loans were granted by the bank.
“As regard the allegation that loan has been given in violation of Section 19(2) of Banking Regulation Act and Master Circular dated 28.08.1998 of RBI, it is stated that RBI clarified that sanctioning of loan under NDU-POA arrangement does not amount to pledge as RBI guidelines do not prohibit granting of advances against primary security of shares to cooperate. Bank has financed in about 30 cases under NDU-POA arrangement upto October 2009 and total loan of those 30 borrowers was upto Rs.15000 crores. Additionally bank has financed 65 borrowers under NDU- POA.”
‘NDU-POA’ stands for ‘non-disposal undertaking-power of attorney’ and is a contract that prevents the sale of a company’s shares by the shareholder.
‘No requirement to take permission from SEBI…’
On the second allegation that the Roys failed to disclose the pledge of shares to the regulatory Securities and Exchange Board of India, CBI in its report stated that the relevant SEBI clause was added later and that such a permission was not necessary at all under the model of the loan the Roys availed themselves of.
“It was clarified by SEBI by letter dated 04.08.2017 that provision of foreclosure of pledged shares was inserted in SEBI (SAST) Regulations 1991 w.e.f. 28.01.2009 and since in this case pledge was made in year 2008 and provision of foreclosure of pledge was inserted only in year 2009, same was not applicable for the foreclosure under SEBI (SAST) Regulations. As such there was no requirement to take permission from SEBI for entering into an agreement of securing loan under NDU-POA arrangement.”
‘Not required to take permission from MIB…’
Regarding the allegation that NDTV founders failed to take permission of the Union information and broadcasting ministry for pledging shares, the Central agency stated that this too was not required.
“As per letter dated 04.07.2017 of Under Secretary, Ministry of Information and Broadcasting (MIB), as per the policy guidelines company was not required to take permission from MIB regarding pledge of collateral of shareholding with any financial company.”
‘Reducing of rate of interest was not isolated case…’
With regard to pre-payment of loan to ICICI bank with a reduced rate of interest, CBI concluded:
“M/s RRPR was not regularly paying the interest on the loan amount to the bank… Committee of Directors of ICICI Bank recommended proposal to reduce DSRA (Debt Service Reserved Account) balance to amount equivalent to 6 months interest in place of 9 months interest… and proposal for repayment of loan with reduced interest was approved by Credit Committee…”
This reduction of rate of interest, CBI’s report states, is on out of the ordinary:
“ICICI Bank has reduced rate of interest in respect of 83 loan accounts during F.Y. 2007-08, 2008-09 and 2009-10. As such reducing of rate of interest was not isolated case and acceptance of proposal of RRPR for repayment to ICICI Bank was also not an isolated case.”
‘Rule incorporated only in 2017…’
On the allegation that the NDTV founders, through M/s RRPR, availed themselves of a loan from M/s VCPL in violation of a law, CBI has concluded that this law came into force much after the loan was taken:
“M/s VCPL transferred Rs.350 crores to M/s RRPR on 05.08.2009 under a loan agreement dated 21.07.2009 and Rs.53.75 crores based on loan agreement dated 25.01.2010 through layer of companies like M/s Shenano Retail Pvt. Ltd., Reliance Strategic Investment Pvt. Ltd., Reliance Ventures Limited etc.
“The rule that no company other than banking companies, financial companies, insurance companies, government companies etc. Shall have more than two layers of subsidies was incorporated only in Gazette Notification dated 21.09.2017 of Ministry of Corporate Affairs, Govt. of India.”
Regarding the loss of Rs 48 crores to ICICI Bank and corresponding gain to promoters of NDTV, it is stated in the cancellation report of CBI that there was no collusion or criminal conspiracy or abuse of official position by any public servant or officers of ICICI bank. The reduction of rate of interest from 19% to 9.65% as approved on August 5, 2009, for the repayment of loan was based on various factors like borrower’s inability, timely payment, continued weak financial performance of NDTV, volatile share price and so on. As such, such reduction of rate of interest was not one of incidence. Moreover, repayment of loan with interest at 9.6% from RRPR was higher than the average cost of funds.
As such, as per the report of the CBI, the sanction of loan to M/s RRPR by ICICI Bank did not violate any law and norms and no criminality could be established.
The CBI had also sought an external forensic audit of the record of loan, and even the audit opined that the transaction seems to be “normal business transaction and closure of loan by ICICI Bank was not in violation of Section 19(2) of Banking Regulation Act.”
In 2022, the Adani Group took over NDTV after the Roys resigned.
