Chanda Kochhar, CEO and managing director, ICICI Bank, decided on Monday to go on leave, stepping aside while justice B Srikrishna conducts an investigation into whether there was a conflict of interest in loans given by the private lender to the Videocon Group. The need for the probe has arisen following allegations Kochhar’s husband Deepak Kochhar benefitted financially, through his company Nupower Renewables, from the business relationship between ICICI Bank and the Videocon Group. Investigative agencies, including the Enforcement Directorate and the CBI have been pursuing an enquiry into the matter.
After a marathon meeting on Monday, the ICICI Bank board appointed Sandeep Bakhshi, CEO & managing director, ICICI Prudential Life, whole-time director and chief operating officer (COO) designate for a period of five years. Bakhshi will report to Chanda Kochhar and depending on when the regulatory approvals come through, will take over as COO from June 19 or later. Corporate experts said the bank’s board had come up with a face-saving arrangement for Kochhar and one that would allow her to step down if found guilty of violating any rules. “The board has stood by Chanda Kochhar and having taken that position initially, it was difficult for them to change that stance and ask her to go,” a senior executive from a consultancy said.
The ICICI Bank board has consistently backed Chanda Kochhar; experts said it was surprising that it had not asked her to go on leave at any point. However, the investigations and the show-cause notice from capital markets regulator Securities and Exchange Board of India (Sebi) have left the bank board with no option, experts said. The chairman of the board, MK Sharma, retires at the end of this month. Last month, market regulator Sebi had sent a notice to Chanda Kochhar, seeking her response on the alleged non-compliance with norms in dealings with the Videocon Group and Nupower Renewables, the company co-founded by her husband Deepak Kochhar.
Sandeep Bakhshi will report to Chanda Kochhar and will be responsible for all the businesses and corporate centre functions. All executive directors on the ICICI Bank board and the executive management will report to him. During Kochhar’s period of leave, Bakhshi will report to the board. The complaints against Kochhar were first raised in 2016 by investor Arvind Gupta. He alleged that the bank’s CEO and MD may have violated the bank’s code of conduct and provisions relating to conflict of interest while giving loans to the Venugopal Dhoot-led Videocon Group. The likely cause of the conflict is the series of financial transactions between the Videocon Group and Chanda Kochhar’s husband Deepak Kochhar.