ICICI Bank CEO and Managing Director Chanda Kochhar has gone on leave following reports that the bank has instituted an independent probe on her. Shares of India's second largest lender rose as much as 3 percent in the morning trade as the news was reported. The bank, however, denied media reports that said Kochhar was asked by the board to go on an indefinite leave. It said in a filing to the stock exchange that she was on a scheduled annual leave.
Kochhar has been in the eye of a storm ever since a whistleblower complaint linked her to irregularities in the sanctioning of a multi-crore loan to the Videocon group. The whistleblower alleged that ICICI Bank gave a Rs 3,250 crore loan to the Videocon Industries in 2012 under Kochhar's watch. The complaint said that a few months before that loan was sanctioned, Videocon chairman Venugopal Dhoot had lent a whopping Rs 66 core to Deepak Kochhar, the CEO's husband.
ICICI Bank had resolutely defended Kochhar and denied any wrongdoing on her part. However, its defence became untenable in the aftermath of mega bank scams like the PNB loan fraud. Earlier this week, the bank yielded to investor and regulatory pressures and announced an independent probe into charges against Kochhar.
On Friday, prominent financial daily The Mint reported that the bank asked Kochhar to go on an indefinite leave. The report said a majority of the board members opined that Kochhar shouldn't continue at the helm until the investigation was completed. The markets responded positively to the news, and the shares edged up.
However. hours later the bank debunked the report and issued a statement that said Kochhar was not asked to go on leave. The bank also denied that an independent investigation against Kochhar, who has been the CEO since 2009, was on.
"She is on her annual leave which was planned in advance," the bank said in a statement. "Further, the board denies that it has appointed any search committee to find her successor."
Before the whistleblower complaint emerged, investor Arvind Gupta had alleged in 2016 that the loans to Videocon were a clear case of conflict of interest. He had said that the funding of a company called NuPower jointly by Dhoot and Deepak Kochhar pointed to the possibility of there being a quid pro quo behind the sanction of loans. In March this year, the CBI launched a probe into the connection between Videocon group and Kochhar's husband. The bank had said last week chief executive Kochhar had received a notice from markets regulator Securities and Exchange Board of India seeking responses over alleged non-compliance.
However, in the latest twist, the Bank has sought to douse speculation on the future of Kochhar. The Mint report had quoted a source that said the board had discussed a succession plan. The source had told the pink daily that the discussions centred appointing a head-hunter to select prospective CEO candidates.