The board of ICICI Bank has appointed former IAS officer Girish Chandra Chaturvedi as its new non-executive chairman to succeed incumbent M K Sharma, as it sets about addressing issues related to allegations of quid pro quo, non-adherence to the code of conduct and conflict of interest involving its CEO and managing director, Chanda Kochhar.
Chaturvedi, a 1977-batch officer who retired as petroleum secretary in January 2013, will succeed Sharma who will retire on June 30.
The move marks a significant change in one of India’s top private banks which, even before it converted decades ago from a development financial institution into a bank, had financial services professionals heading the board such as N Vaghul and later K V Kamath.
The appointment of an experienced former bureaucrat who has been on the boards of state-owned banks and worked in the banking and insurance division of the finance ministry is being viewed as a move to sort out governance issues and allay concerns of investors and regulators.
The appointment, with effect from July 1, is for a period of three years and is subject to RBI and shareholder approvals, the bank said in a stock exchange filing.
“The board is extremely pleased with this development and believes that Chaturvedi will provide maturity and sagacity to the deliberations of the board. This would also ensure a seamless and smooth transition of leadership at the board and would address stakeholder concerns in this behalf,” a statement issued by the bank said.
The board had earlier considered several former bankers, including former Bank of Baroda chairman M D Mallya, for the post. “As the board did not get a suitable candidate, board members considered several retired bureaucrats, including a former financial services secretary, a former Sebi chairman and a former revenue secretary for the job,” official sources said.
Government nominee Lok Ranjan and LIC nominee V K Sharma have not attended the last several meetings of the bank’s board.
Chaturvedi takes over at a crucial time when an independent probe by Justice (retd) B N Srikrishna is underway into complaints against Chanda Kochhar.
On June 18, the bank’s board said Chanda Kochhar would go on leave till the independent probe against her is completed. It also appointed Sandeep Bakhshi, MD and CEO of ICICI Prudential Life, as Wholetime Director and Chief Operating Officer designate of the bank.
Chaturvedi is not new to the banking sector as he had served as government nominee on the boards of Canara Bank, Bank of Baroda and IDBI Bank Ltd, and New India Assurance Co Ltd and United India Insurance Co Ltd.
The first task before him is to handle the notice issued by the Securities and Exchange Board of India (Sebi) to the bank and Chanda Kochhar for non-compliance of the listing agreement in the Videocon case — a probe is also underway by the US SEC as the bank’s stock is listed overseas.
On March 29, The Indian Express first reported that Videocon promoter Venugopal Dhoot provided a loan of Rs 64 crore to NuPower Renewables Pvt Ltd (NRPL), a firm he had set up with Chanda Kochhar’s husband and two relatives six months after the business group got Rs 3,250 crore as loan from ICICI Bank in 2012.
Dhoot transferred proprietorship of the company to a trust owned by Deepak Kochhar for Rs 9 lakh, six months after he received the loan from ICICI Bank. The Videocon account was declared an NPA or a bad loan in 2017.
Last Thursday, The Indian Express reported that the income tax department is probing the acquisition of the current family residence of Chanda Kochhar in South Mumbai by her husband Deepak Kochhar in a complex transaction involving firms linked to Videocon Group. Chanda Kochhar’s current term as MD & CEO will end in March 2019.
The actions of the board, led by Sharma, after the Videocon issue surfaced had raised eyebrows when it was quick to come out in defence of Chanda Kochhar.
However, on May 30, while instituting an enquiry into a new complaint against Chanda Kochhar, the board said that the probe into the fresh complaint will be headed by an “independent and credible person” and would be “comprehensive”.
According to Institutional Investor Advisory Services India (IiAS), the board boxed itself in by jumping to Chanda Kocchar’s defence without a full-blown external investigation. Any incremental step that it takes will have additional impact on its own credibility, it said.
“If ICICI Bank’s board does not change its tack, its mis-steps will smear the bank’s reputation and legacy for longer than the current controversy. The board has not started on its best foot and remains enmeshed in tangles that it has tied itself into,” the proxy advisory firm said.