ICICI benches Chanda, at last
Mumbai: ICICI Bank on Monday asked Chanda Kochhar, its managing director and CEO, to go on leave till the completion of an inquiry into a whistleblower's allegations of conflict of interest related to loans to a couple of borrowers.
The bank named Sandeep Bakhshi as its whole-time director and chief operating officer (COO) for a five-year tenure.
The board of directors of the bank, which had come out in strong support of Kochhar when the complaints surfaced in March, announced the decisions after a daylong meeting to try and quell mounting criticism of its governance practices.
Federal investigators had started to pore over the complaints, turning the heat on the bank over loans to certain borrowers who had close ties with Kochhar's husband and his businesses.
Last week, the bank appointed Justice B.N. Srikrishna, a retired Supreme Court judge, to investigate complaints that Kochhar had violated the bank's code of conduct and was involved in quid-pro-quo transactions with some borrowers.
It isn't clear when Justice Srikrishna will submit his report. Reports suggest the judge will soon appoint forensic auditors to scan the bank's books.
Kochhar's tenure as CEO and MD ends next March and Bakhshi's appointment as the COO - subject to regulatory approvals - seems to signal the bank is putting in place a succession plan and will be grooming him to don the CEO's mantle.
Bakhshi is now managing director and CEO of ICICI Prudential Life Insurance Company. He will assume his new role from Tuesday.
ICICI Bank has also recommended to the board of directors of ICICI Prudential Life Insurance Company that it appoint N.S. Kannan as its managing director and CEO, replacing Bakhshi. Kannan is the bank's executive director.
The bank said Bakhshi would be responsible for handling all the businesses and corporate centre functions. All the executive directors on the board of ICICI Bank and the executive management will report to him.
The directors tried to soften the blow by saying in a statement that Bakhshi will report to Kochhar. However, during the period of her leave, he will report to the board.
Shriram Subramanian, founder of InGovern, a proxy advisory and corporate governance firm, said the board should have asked Kochhar to go on leave a month ago. "The announcement from ICICI Bank shows that the current CEO has decided to go on leave.... This is a weak board as it should have asked her to go on leave,'' Subramanian said.
Whistleblower Arvind Gupta's complaints relate to loans of Rs 3,250 crore that ICICI Bank had provided to the Videocon group in 2012. The accusation was that the bank had sanctioned the loans because of the business relations between the Dhoots and Kochhar's husband Deepak.
Kochhar was on the credit committee that approved the loan to Videocon. However, ICICI Bank had denied any wrongdoing, saying it was part of a consortium of lenders that had extended the loan to Videocon.
The market had been anticipating the decision on Kochhar. Shares of ICICI Bank rose by 3.61 per cent on reports of a shuffle in its top management.