For ICICI Bank and CEO-on-leave Chanda Kochhar, the chickens have finally come home to roost. The bank had tried to avert the inevitable step against the CEO for several months and Kochhar herself dug in her feet until the last moment, trying to hang on as the top honcho at the beleaguered bank.
India's top private lender, which has borne the taint of a dubious multi-crore 2012 loan to Videocon Industries under the watch of Kochhar, finally took the decision to send Kochhar up the garden path. However, the inside story reveals that Kochhar was defiant until the last moment and it needed some coercion and a stern, unified stand by all board members to make her vacate the high-profile position.
Chanda Kochhar was aggressive, angry and she challenged the board as to why she should step aside, according to media reports that carried information that leaked out from the proceedings at the crucial June 18 Board meeting. Kochhar, who had more than a year left in her second 5-year term at the helm of the bank, "left the board room in a huff' miffed by the direction of the proceedings, the Times of India reported. The report said she had to be 'persuaded' to return.
The crucial blow to her attempts to hang in by the skin of her teeth came when the Chairman of the Life Insurance Corporation of India (LIC) weighed in against her continuance. LIC is the largest shareholder in ICII Bank. Kochahar's resistance was overawed by this move and other independent directors pitched in, pressing for her removal.
An angry Kochhar also rebelled against the wording of the board statement on the appointment of Sandeep Bakhshi as COO in the absence of the regular CEO. The board had initially drafted a statement that said it had unanimously asked Kochhar to go on leave. However, Kochhar flatly refused to accept such a statement.
The final board statement read thus: "In line with the highest levels of governance and corporate standards, Chanda Kochhar has decided to go on leave till the completion of the enquiry as announced on May 30, 2018".
The troubles for Kochhar and ICICI Bank had started when a whistleblower revealed irregularities and conflict of interest over the sanctioning of a huge loan to the Videocon Industries in 2012. The Rs 3,250 crore loan to the group was sanctioned under Kochhar's watch. However, the whistleblower 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.
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.
However, ICICI Bank had stated in April that its internal investigations had found no proof for any wrongdoing by Kochhar. it had said that though Kochhar was in the committee that approved the Videocon loans, but there was a broader consortium consisting of other banks that paid out the money.
The pressure on the bank, however, intensified in the backdrop of the mega bank frauds such as PNB scam and various reports on the bulging non-performing assets at Indian banks. ICICI Bank faced criticism for moving slowly on a critical complaint against the top management. Meanwhile Kochhar herself came under pressure with voices in the industry calling for her ouster.
On May 30, the board finally decided to ask Kochhar to go on leave while the inquiry into the conflict of interest on her side was investigated.
On Monday, 18 June, ICICI appointed Sandeep Bakhshi as its whole-time director and chief operating officer (COO). The bank said that Bakhshi was brought to the board for a term of five years.