ICICI Bank may send MD & CEO Chanda Kochhar on indefinite leave

Cornelia Mascio
Giugno 19, 2018

Sandeep Bakhshi is the Managing Director (MD) and CEO of ICICI Prudential Life Insurance. He will take over on June 19.

Kochhar, 56, who has been CEO of ICICI Bank, India's third-biggest lender by assets, since May 2009, has faced allegations of favouring Videocon Group, a consumer electronics and oil and gas exploration company, in the bank's lending practices. The letter alleges that Kochhar, as joint managing director of ICICI Bank in December 2008, was also a shareholder in NuPower.

Though the bank's board had initially backed the CEO, pressure was mounting on Kochhar to either step down or recuse herself from the daily operations of the lender until the enquiry was completed.

When allegations of conflict of interest against the bank's CEO Chanda Kochhar first surfaced, the board did not give the impression of taking these seriously.

With its Managing Director and CEO Chanda Kochhar battling allegations of corporate misconduct and quid pro quo (exchanging favours) in sanctioning of loans, ICICI Bank on Monday evening announced a reshuffle of its top management. The stock had rallied 3.6 percent on Monday.

Another global brokerage firm Citi also maintained its Buy call on ICICI Bank with a target price of Rs 390, saying the appointment of Bakhashi significantly reduced the uncertainty among all stakeholders regarding management.

The bank has yet to provide any details of the probe.

The market regulator Sebi had earlier this month issued a show cause notice against Kochhar and ICICI Bank for violating the bank's code of conduct by not making necessary disclosures.

ICICI Bank shares have underperformed its private sector peers for a long time over bad loan concerns, but some analysts have turned positive on ICICI Banks shares after his appointment. Before the loan sanction, however, Dhoot transfers a controlling stake in NuPower to an associate, Mahesh Chandra Punglia, who-after securing the loan-sells it to Deepak Kochhar for a mere Rs9 lakh. The bank on its part has clarified that Chanda Kochhar was part of the credit committee meeting which evaluated the Videocon loan in 2012.

Kochhar has denied any wrongdoing. The decision of the ICICI Bank's board has raised more questions than answers.

In the 2000s, she has focussed on building the bank's retail business, besides technology and innovation and distribution channels across India and overseas.

ICICI Bank's year-on-year net profit for Q4FY18 (January to March) fell almost 50 percent, to Rs 1,020 crore, as bad loans and provisions soared.

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