Sandeep Bakhshi dons a heavy hat after Chanda Kochhar's exit from ICICI Bank

The exit of Chanda Kochhar as the chief executive may augur well for the country's biggest private bank, by bringing an end to the uncertainty at the top leadership. However, ICICI Bank’s board and Sandeep Bakhshi, Kochhar's successor, may have a lot to prove on the corporate governance and business functioning from here on.

Within five minutes of Kochhar’s announcement to step down as the chief executive officer and managing director (CEO and MD), ICICI Bank shares jumped as high as 5.69 percent and closed 4.07 percent higher. The stock rose even as the Sensex slumped by 800 points.

Kochhar’s exit has made way for the recently appointed chief operating officer Sandeep Bakhshi to take charge. Bakhshi was appointed as the COO in June, after Kochhar went on leave.

Since March-end, the bank had been constantly under the media glare and investor ire due to allegations of conflict of interest involving Kochhar relating to loans given to Videocon Group.

“It is positive for the bank only in one respect that the uncertainty has gone. Whether Chanda was good or Sandeep Bakhshi will be better, only time will tell,” JN Gupta, Co-Founder & MD, Stakeholders Empowerment Services.

Although ICICI Bank’s board has previously supported Kochhar ruling out any quid pro quo or wrongdoings by her, pressure from investors and media forced the bank to call for an external probe, which is led by former Supreme Court judge Justice Srikrishna. The probe report will likely be out by November, according to the bank’s Chairman Girish Chandra Chaturvedi.

A graceful exit? 

“I would not say graceful at this juncture. Had she stepped down when the controversy first erupted and she could have remained out of the executive role till the inquiry was completed. In the final leg, the grace element has reduced,” Gupta said.

The bank’s statement said the Board of Directors “accepted the request of Chanda Kochhar to seek early retirement from the Bank at the earliest. The Board accepted this request with immediate effect”.

Independent analyst Hemindra Hazari said, “The whole language of the statement shows the board completely lacks independence. In public sector banks, the likes of Allahabad Bank’s CEO Usha Ananthasubramanium, we have seen her being sacked along with a CBI probe being brought in by the government, which is the owner. But in the private corporate sector, the board doesn’t hold much power.”

Hazari pointed out that the board had allowed her to overstay and why is it “always her decision – whether she decided to stay, to go on leave and even now it is her decision to quit”.

Some point out that the board will now need to introspect and debate why the clean chit was given without a thorough inquiry. “A board can make mistakes but it needs to get clarity and ensure this is not repeated going forward or that they still stand by their decision,” Gupta added.

Bakhshi dons a heavy hat

Sandeep Bakhshi is an old hand at ICICI Bank and has been with the group for 32 years. He started off as an official in the operations department in the bank in 1986. He gained experience across retail banking, project appraisals as well as risk management and handling of large corporate clients.

A large institutional investor in the company said considering the group has an ‘image-crisis’ in the market, Bakhshi is the best fit to take on the role.

“We had expressed concerns about the alleged conflict of interest dealings. Rather than getting an individual for the top job who would have had to start from scratch, Sandeep is a good fit since he has been associated with the group for more than three decades,” said a member of a large investee company.

A close associate of Kochhar, Bakhshi is known to have stabilised ICICI Bank’s life and general insurance arms and considered to be a ‘turnaround man’ within the insurance industry.

In fact, he is claimed to be responsible for the successful 2016-listing of ICICI Prudential Life Insurance, which was the first insurer to be listed on the exchanges . It was also among the first private sector entrants into the insurance sector at a time when Life Insurance Corporation of India (LIC) was the dominant player and later the life insurer became among the top three private life insurers in the sector.

Currently, the general insurance arm ICICI Lombard is the largest private sector general insurance company.

However, Bakhshi is no stranger to controversies.

In 2017, an FIR was against ICICI Pru Life officials in Rajasthan for mis-selling of insurance policies. And there is the ‘infamous’ jehad sales campaign by a few employees, who were eventually arrested in 2005. The employees glorified Osama bin Laden in the campaign and his ‘focused determination’ in an effort to increase business by likening successful policy sales to killing people.

“Bakhshi is not 'fit and proper'…ICICI Bank’s board is absolving him of all wrongdoings. As a CEO, he presided over a company which was responsible for mis-selling and is now being rewarded,” Hazari says.

Also, compared to banking, insurance typically follows a straight-jacket model where bad risks are eliminated before even being written into the books.

On the other hand, in the banking sector, stable assets turning non-performing assets (NPAs) are not a new phenomenon making the new hat heavier for Bakhshi.