According to sources, they have written to the regulator, requesting it to share documents on the basis of which the notice was served. The deadline to respond to the notice was Thursday.

“Sebi issued a 12-page show-cause notice to ICICI Bank and Chanda Kochhar on May 23. The notice, however, did not have adequate documents to support the allegations. Before filing an appropriate reply, evidence of alleged contravention of securities laws needs to be examined by the recipients,” said a person privy to the development.

ICICI Bank refused to comment on the issue.

The regulator in its notice alleged violations of the code of conduct because Chanda Kochhar reportedly had not disclosed the conflict of interest arising out of business dealings among ICICI Bank, Videocon and NuPower Renewables, led by her husband, Deepak Kochhar.

All listed companies and their key managerial staff are required to follow a code of conduct and should also comply with all securities norms.

On April 17, the regulator had initiated a preliminary enquiry into whether the bank’s board was aware of the conflict of interest and also the stance of the independent directors when the board had approved the loan. Besides, the regulator sought an explanation on lapses in disclosures of business dealings involving Deepak Kochhar.

In an official response to Sebi, ICICI Bank had furnished all the relevant documents and the mode of transactions involving the bank, Videocon, NuPower and Deepak Kochhar. Sources said Sebi found inconsistencies in the reply submitted to it. It has initiated adjudication proceedings against ICICI Bank and its chief.

The bank has ordered an independent inquiry into Sebi’s allegations. Chanda Kochhar, who is on annual leave, is expected to resume office on June 15. Given the timing, there has been speculation that she might have been nudged to take leave to ensure an independent probe.

Sources said the bank might inspect the evidence and then decide on the course of action.

Legal experts said ICICI Bank and Chanda Kochhar could file a settlement plea with Sebi under its consent mechanism to resolve the case. A consent application can be filed within 60 days of being served a show-cause notice.

In the notice, Sebi has asked ICICI Bank if its shareholders and board members were apprised of the Central Bureau of Investigation (CBI) probe in relation to the alleged quid pro quo in the loan that the Bank provided to the Videocon group and Videocon’s investment in NuPower Renewables.

The CBI had registered a preliminary enquiry in February and had named Deepak Kochhar and Videocon group Chairman Venugopal Dhoot. Soon after the CBI move, ICICI Bank had on March 28 told the bourses that its board had reviewed the bank’s internal processes for credit approval and found these to be robust. ICICI Bank Chairman MK Sharma had said the board had “full faith and confidence” in Chanda Kochhar.