ICICI Bank today announced that its CEO Chanda Kochhar has decided to go on leave till the completion of an external enquiry into alleged conflict of interest in extending loans to some corporates like Videocon and named Sandeep Bakhshi as the chief operating officer.
Bakhshi, who has been the MD and CEO of ICICI Bank’s life insurance arm, would handle “all the businesses and corporate centre functions” of the bank. His appointment is for a period of five years starting tomorrow, subject to various approvals.
“All executive directors on the board of ICICI Bank and the executive management will report to him. Bakhshi will report to Chanda Kochhar, who will continue in her role as MD and CEO of ICICI Bank,” the bank said in a statement.
In Kochhar’s absence, he would report to the board.
The latest development also comes in the backdrop of Kochhar and her family members facing allegations of quid pro quo and conflict of interest with respect to a loan extended to certain entities, including the Videocon group.
Multiple agencies, including the CBI and regulator Sebi, are already probing the alleged lapses involving Kochhar and her family members.
“Kochhar has decided to go on leave till completion of the enquiry as announced on May 30. The board has noted and accepted this. During her period of leave, the COO will report to the board,” the statement said.
The current tenure of Kochhar, who has been at the helm since 2009 and has been on āannual leaveā for some time now, ends next March.
Apart from being the COO, Bakhshi would be a whole-time director and a board member. He has been with the ICICI Group for over three decades and was the deputy managing director of the bank before going to head the life insurance business in 2010.
At ICICI Prudential Life, the bank’s executive director N S Kannan would replace Bakhshi as the MD and CEO.
Kochhar, a career ICICI Group employee has been under the cloud since late March, when allegations of conflicts of interest and possible quid pro quo in lending to Videocon group, along with lack of disclosures by the bank, made headlines.
Following reports of allegations based on an activist’s complaint, the bank board earlier had come out strongly in support of her.
Complicating the matters for her, the bank received another complaint against Kochhar by an internal whistle-blower, who made allegations of not following the bank’s code of conduct, late May.
This led the board to announce a detailed probe by an external expert into the allegations. Retired Supreme Court judge B N Srikrishna would be heading the probe panel.
According to sources, he has accepted the request from the bank and the terms of reference for the panel are to be decided by the audit and governance committee of the bank.
While the contents of the whistle-blower’s complaint are not known, the first set of allegations against Kochhar pertains to alleged impropriety while lending to the cash-strapped Videocon Group and companies associated with the Ruia family, the promoters of beleaguered Essar Group.
However, the statement from the bank did not have any mention of it.
The cases under scanner include the bank extending Rs 3,250 crore to Videocon Group in 2012 and the involvement of Chanda Kochhar’s family members, including her husband Deepak Kochhar, in first sanctioning the loan and then restructuring the same through Avista Advisory, a company run by his younger brother Rajiv Kochhar.
There are also allegations that NuPower — a company floated by Videocon group and Deepak — got investments of Rs 325 crore from the Mauritius-based Firstland Holdings, a firm owned by Nishant Kanodia, the son-in-law of Essar Group co-founder Ravi Ruia.
Earlier this month, Finance Minister Piyush Goyal said the law would take its course in the alleged case of nepotism at ICICI Bank, even though it was a good bank with “very robust processes”.
Kochhar is credited for consolidating the operations of the bank after the departure of K V Kamath.
The bank, with roots in development finance, has also seen a massive rise in its sour assets, courtesy mainly on exposure to the infrastructure sector, along with its peers, which led to a massive drop in profit in recent quarters.
Selling off stakes in group companies — it listed the life general insurance arms as well as brokerage businesses in quick succession — gave it the wherewithal to withstand the high provisioning required recently.
In the run up to the board meeting, ICICI Bank shares today jumped over 3.6 per cent to Rs 292.50 on the BSE.
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