India’s largest private sector bank ICICI Bank Monday said its Managing Director and CEO Chanda Kochhar, who is facing allegations of quid pro quo and non-adherence of code of conduct and conflict of interest, will go on leave till an independent probe against her is completed.
The board of directors of the bank, which met in Mumbai, decided to appoint Sandeep Bakhshi, who is currently MD and CEO of ICICI Prudential Life, its life insurance subsidiary, as Wholetime Director and Chief Operating Officer designate of the bank. Bakhshi will be responsible for handling all businesses and corporate centre functions at the bank and also report to the board till the probe against Kochhar is over.
On March 29, The Indian Express first reported that Videocon group promoter Venugopal Dhoot provided crores of rupees to NuPower Renewables Pvt Ltd (NRPL), a firm he had set up with Chanda Kochhar’s husband Deepak Kochhar and two relatives six months after the Videocon group got Rs 3,250 crore as loan from ICICI Bank in 2012. He 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.
In a statement Monday, the bank said: “All Executive Directors on the board of ICICI Bank and the executive management will report to him. Bakhshi will report to Chanda Kochhar who will continue in her role as MD & CEO of ICICI Bank.”
“In line with the highest levels of governance and corporate standards, Chanda Kochhar has decided to go on leave till the completion of the enquiry as announced on May 30, 2018. The board has noted and accepted this. During her period of leave, the COO will report to the board,” it said.
Bakhshi’s appointment as COO will be for a period of five years, subject to regulatory approvals. He will take over as the COO from June 19, or on the date of regulatory and other approvals, whichever is later, it said.
Chanda Kochhar has been on annual leave after the announcement of fourth quarterly results. Incidentally, the term of ICICI Bank chairman M K Sharma is also coming to an end on June 30. Sources said he is unlikely to opt for another term.
Bakhshi is now being seen as a strong candidate to succeed Kochhar when her term ends early next year.
Justice B N Srikrishna, former judge of the Supreme Court of India, is probing the anonymous whistle blower complaint alleging non-adherence of code of conduct, conflict of interest and quid pro quo by Chanda Kochhar while dealing “with certain borrowers” of the bank. The enquiry process is underway and the final report may take time as the issue is “complex and contentious”, sources said.
On May 30, the board of ICICI Bank instituted an enquiry into a new complaint against Kochhar, but it did not specify the time by when the final enquiry report is expected. What is significant this time was that the board, which had earlier given a clean chit to Kochhar in the conflict of interest and alleged quid pro quo in the Videocon case, decided that the probe against the fresh complaint will be headed by an “independent and credible person” and would be “comprehensive”.
The Securities and Exchange Board of India too had issued notice to Chanda Kochhar for non-compliance of the listing agreement in the Videocon case. Banking regulator Reserve Bank of India is yet to comment or take action against the bank or its CEO.
The CBI has launched a preliminary enquiry into the matter to check any wrongdoing, while other agencies, including the Enforcement Directorate also opened investigations. The bank’s board stood firmly behind Chanda Kochhar initially, saying no wrong was committed by the MD and CEO. Last month, chairman Sharma had said the bank had satisfactorily replied to all the questions of the regulators.
Also, Arvind Gupta, an investor who in March 2016 complained to the Prime Minister’s Office about the alleged business links of Deepak Kochhar and Venugopal Dhoot, wrote a supplementary letter on May 11 this year, asking the government to probe the transactions between the Essar Group and Nupower Renewables Pvt Ltd of Deepak Kochhar.
In the new letter, Gupta said Essar Global, Mauritius directly funded Nupower Group through Nishant Kanodia, son-in-law of Ravi Ruia, and Anirudh Bhuwalka, nephew of Shashi Ruia, using the Mauritius-based Firstland Holdings and A-One Motors and Services Ltd owned by Kanodia and Bhuwalka respectively. On April 26, The Indian Express had reported that NuPower got investments of Rs 325 crore from Firstland Holdings. The investments from Kanodia’s firm into NuPower started in December 2010. Incidentally, the same month ICICI Bank was lead banker in a consortium of Indian banks that extended a $530-million loan to Essar Steel Minnesota LLC on December 29, 2010. This loan was later classified as NPA.
WHO IS SANDEEP BAKHSHI?
Sandeep Bakhshi, the new Wholetime Director & Chief Operating Officer designate of the bank, is widely speculated to take over as the next MD and CEO of ICICI Bank as Chanda Kochhar’s term is coming to an end in March 2019.
Bakhshi has been Managing Director & CEO of ICICI Prudential Life Insurance Company, since August 1, 2010. He has extensive experience of leading both corporate and retail businesses across the ICICI Group. He started his career with ICICI in 1986.
Meanwhile, ICICI Bank board also recommended to the board of directors of ICICI Prudential Life Insurance Company to appoint N S Kannan as Managing Director & CEO of the company subject to regulatory and other approvals. Kannan is now Executive Director of ICICI Bank.