The recent behaviour of ICICI Bank and its MD and CEO, Chanda Kochhar, is a reflection of the poverty of corporate governance in our prime institutions. It’s only after months of sustained public criticism that the bank’s board has thought it fit to set up an internal inquiry and ask Ms Kochhar to go on leave. The issues are serious. In 2012 ICICI Bank advanced a loan of `3,250 crore to an Indian conglomerate.
The loan remains unpaid today. Six months before the loan was given, the chairman of that company lent the ICICI Bank chief’s husband, Deepak Kochhar, `64 crore to develop a solar power business. He inexplicably transferred the lending entity to Mr Kochhar later for just `9 lakh. The possible quid pro quo between the two transactions is being investigated by the CBI since February.
Thereafter, Sebi has given notice to the bank and started a preliminary inquiry. Meanwhile, whistleblowers have revealed more dirt—another Indian company funding Deepak Kochhar’s NuPower, possibly in exchange for a $530 million loan advanced by ICICI Bank to that company. In the face of these inquiries and the mountain of prima facie evidence, the ICICI Bank board had blindly given a stamp of approval to Chanda Kochhar.
It is good that the bank’s board has now stopped being an ostrich with its head in the sand, and has changed its stand. But asking Ms Kochhar to proceed on leave is not enough. She must either voluntarily resign or be asked to put in her papers. Internally, there cannot be an independent probe while she continues to hold a primary position in the bank.
Where have all the claims of following international practices of corporate governance gone? Quite recently, Martin Sorrell, Chairman and CEO of the world’s largest advertising company, WPP, put in his papers in London, after lawyers of the company launched an investigation into possible personal misconduct by the boss. It’s still not too late for Ms Kochhar to quit and redeem herself, at least in ensuring a neutral investigation.