While Kochhar stepping down is a corrective, though belated, the Board has to ensure that decision-making is not impeded till the probe reaches a conclusion and that it does not again drag its feet after the findings are in.
A little over two months after the ICICI Bank board gave a clean chit to CEO Chanda Kochhar and ruled out any quid pro quo in ICICI’s Rs 3,250 crore loan to the Videocon group, the bank announced Monday that Kochhar “has decided to go on leave till the completion of the inquiry” by retired Supreme Court justice BN Srikrishna into allegations of wrongdoing against her. The loan in question is now an NPA. An investigation by this newspaper revealed that Videocon’s chairman had significant commercial dealings with a firm operated by Kochhar’s spouse.
ICICI Bank has appointed Sandeep Bakhshi, managing director and CEO of group company ICICI Prudential Life Insurance Ltd, as whole time director and chief operating officer — a new position that has been specially created. All business heads will report to Bakhshi, who, in turn, will report to the Board while Kochhar is on leave. By stepping aside till the probe is done, Kochhar has done the right thing. But this should have been done much earlier, given that the allegations levelled by an anonymous whistleblower are serious — “conflict of interest”, “non adherence to rules”, and “quid pro quo” while dealing with “certain customers of the bank”. The delay in taking the decision now only reinforces the impression that this was done kicking and screaming, under duress from the board, that has looked the other way all along. This, despite mounting pressure from a string of probes by multiple agencies, including the Central Bureau of Investigation, the Enforcement Directorate and capital market regulator SEBI.
Also, in appointing Bakhshi, four senior executives of of the bank who are currently on the board have been bypassed. There are concerns that the interim arrangement — Bakhshi reporting to the Board till the investigation by the panel is over — could hold up key decisions at the country’s second largest private bank. The Board’s complicity in enabling Kochhar to continue at the helm for so long, despite multiple probes, is a violation of a fundamental tenet of the banking system: Investor trust is key. So while Kochhar stepping down is a corrective, though belated, the Board has to ensure that decision-making is not impeded till the probe reaches a conclusion and that it does not again drag its feet after the findings are in.