MUMBAI: The 34-year-career graph of Chanda Kochhar is one that’s built on talent, but perhaps, beaten by greed. None would have imagined that the celebrated banker would ever be drummed out of office following allegations of nepotism.
On Thursday, Kochhar decided – probably wisely – to hang up her boots, nine years after taking over the reins at ICICI. Her sudden departure, some may think, will put the alleged corruption angle to bed, but it indeed strengthens the worst suspicions about irregularities at the bank.
Her deputy, Sandeep Bakhshi, is elevated as MD and CEO for five years, a move to which markets gave a polite golf clap, sending ICICI shares 4 per cent higher on the BSE.
In her own words, she aspired to do better than others and once even advised her daughter, “to aim for the skies and not be afraid of the unknown”. Could this no-holds-barred approach have resulted in her downfall? For instance, in 2008-09, Kochhar rose to fame for her disciplined retail expansion, but later turned aggressive, may be unknowingly, and the bank was seen extending loans – perhaps not always wisely – driven by Kochhar’s desire to break ICICI into the global top 20 banks. This resulted in an astronomical increase of bad loans and divergences in reporting bad loans.
Private lender looks to new chapter after Kochhar exit
Her turbulent exit is triggered by alleged favouritism extended to Videocon Group, which jockeyed bargains in return for investments in NuPower Renewables, promoted by her husband Deepak Kochhar. The allegations first came to light in 2016 and resurfaced in March.
The then ICICI board rushed to shoot down the rumours, backing Kochhar without even doing an internal probe. Kochhar stayed out for a while, hoping all will be well, but the CBI, the I-T Department and SEBI all closed in, forcing the bank to send her on leave in June.
A committee headed by former Justice B N Srikrishna is conducting an independent investigation, and the enquiry will remain unaffected by Kochhar’s exit. However, ‘certain benefits will be subject to the outcome of the enquiry.’
In 2000, it was her leadership that helped ICICI build the country’s largest retail network, including expanding operations to 15,600 villages, adding 18.5 million customers, and setting up 3,000 ATMs in rural areas.
Sandeep Bakhshi
Bakhshi, who took the helm of the bank on an interim basis in June, was named Managing Director and Chief Executive Officer for a period of five years until October 3, 2023, subject to various approvals.
Bakhshi, a Mechanical Engineer from Punjab Engineering College, Chandigarh, started his career with ICICI in 1986.
He looked after the corporate clients for the Northern and Eastern regions of ICICI Limited before joining ICICI Lombard in 2002.
His work responsibilities included business development, project appraisals, project monitoring and business restructuring.
ICICI Bank said the "inquiry instituted by the board will remain unaffected" by Kochhar's exit, adding that some of her retirement benefits would be subject to the outcome of the probe.
The board had initially backed Kochhar, calling the nepotism allegations against her "malicious and unfounded", but later instituted the probe into the matter in June.
Kochhar, who had headed the country's third-largest lender since May 2009, will also step down from the boards of all ICICI subsidiaries including ICICI Securities where she had just weeks ago sought reappointment as chairperson.
The bank further said that the external enquiry instituted by the board against Kochhar in May will continue and the benefits to her would be subject to the outcome of the probe.
"The enquiry instituted by the Board (against Kochhar) will remain unaffected by this and certain benefits will be subject to the outcome of the enquiry. Kochhar will also relinquish office from the Board of Directors of the Bank's subsidiaries," the statement said.
"The Board of Directors of ICICI Bank accepted the request of Chanda Kochhar to seek early retirement from the Bank at the earliest," it said.
Kochhar's current five-year tenure as CEO was to end on March 31, 2019.
Meanwhile, independent director M D Mallya too resigned from the board for health reasons.
Shares of ICICI Bank closed at Rs 315.55, up 3.94 per cent on the BSE even as the benchmark index Sensex plunged by more than 2 per cent.
There are allegations of involvement of Kochhar and her family members in a loan provided to Videocon group on a quid pro quo basis.
It was alleged that Videocon Group pumped money into NuPower Renewables, a firm owned by Deepak Kochhar, husband of Chanda Kochhar.
There are also allegations that NuPower got investments of Rs 325 crore from Mauritius-based Firstland Holdings, a company owned by Nishant Kanodia, son-in-law of Essar Group co-founder Ravi Ruia.
The investments from Ruia's son-in-law's firm into NuPower started in December 2010.
Incidentally, the same month ICICI Bank was the lead banker in a consortium of Indian banks that extended a USD 530 million loan to Essar Steel Minnesota LLC on December 29, 2010.
This loan was later classified as NPA.
The Reserve Bank in its 2016 investigation in the matter had raised questions over the ownership of the Mauritius-based entity, First Land Holding, which had invested Rs 325 crore in NuPower.