Without doubt, Chanda Kochhar has had a remarkable career. Chosen by KV Kamath and Narayanan Vaghul to lead ICICI Bank from May 2009—she was picked over Shikha Sharma—Kochhar has been a competent CEO. She has neither the brilliance of Vaghul nor the dynamism of Kamath and, compared with her predecessors, has, by and large, kept a low profile. But her nine years at the bank have shown her to be a confident leader—one who has steered the ship with steady hands. To be sure, ICICI Bank’s loan losses have turned out to be far higher than anticipated, but the environment hasn’t been easy; every lender that bet on infrastructure has had to pay a price. Else, under her watch, the ICICI franchise has done well.
It is unfortunate, therefore, that her career should end on such a low note. But that is entirely her fault. One misstep has cost the level-headed Kochhar her reputation—the decision not to step aside sooner to allow an independent investigation into allegations she failed to make adequate disclosures about her husband’s company. The firm, NuPower Renewables, is believed to have benefitted from funds received by the Videocon Group to which ICICI Bank had earlier loaned money. The criticism that Kochhar has invited by staying on—or rather digging in her heels—is more than valid. While it is true the ICICI board has behaved most unprofessionally in having given her a clean chit with undue and unseemly haste, it is also true Kochhar needed to have gone on leave as soon as the allegations became public. After all, ICICI Bank is a listed entity with thousands of shareholders.
Had she called for an independent probe rather than waiting for others to initiate it, Kochhar would have won appreciation and admiration. But her insistence on staying put even after the Securities and Exchange Board of India (Sebi) issued a 12-page show-cause notice, on May 23, was unwarranted. The fact is that both Kochhar and the board have failed to explain what exactly has happened. If indeed, as the board first said, Kochhar has complied with the lender’s disclosure rules, why not put out a statement with all the details? Instead, the board put out a sketchy release while all Kochhar has said is that she and the bank are co-operating with the concerned agencies. Indeed, the ICICI Bank board comes across as hopeless, weak and powerless—even spineless—because even after the BN Srikrishna committee was appointed to probe the matter, it didn’t ask Kochhar to go on leave. Members should have been mindful of the fact that the central investigative agencies—ED, CBI—were probing the case and that shareholders were rattled.
While some of the board members are her colleagues, and can plead loyalty, the chairman and the four independent directors needed to be made of sterner stuff. MK Sharma needed to have convinced the others—long ago, when the matter first arose—that Kochhar must be asked to step aside. Indeed, the claim made by Kochhar on Monday night that she was going on leave to uphold corporate governance standards ring hollow. Had she really believed in it, she would not have waited so long.