Beena Parmar Moneycontrol News
The last couple of weeks have been tough for ICICI Bank’s Chanda Kochhar, who is one of India’s top bankers, as she fights losing confidence from investors, media and experts in the banking sector.
Speculations and suggestions of her stepping down as the CEO and Managing Director of ICICI Bank, which is country’s largest private sector bank, have been rife as the nepotism links widen amid various investigations and reports.
“A couple of Board members do have reservations on her continuing as the CEO but they are still evaluating the process. Also, given the asset quality troubles, weak investor response to the IPO of ICICI Securities and the losing investor confidence, it may be a matter of time that she may have to step down till the investigations give her a clean chit,” said a person aware of the developments.
At present, the 12-member ICICI Bank board has six executive directors or bank employees, and six non-executive directors. The latter six include bank Chairman MK Sharma, LIC chairman VK Sharma, Finance Ministry Joint Secretary Lok Ranjan (replaced Amit Agarwal on April 5) and three other independent experts (Dileep Choksi, Neelam Dhawan and Tushaar Shah).
On March 29, a news report of the allegations made by a whistleblower in October 2016 through a blog resurfaced in the media, raising questions over ICICI Bank sanctioning loans to the Videocon Group in 2012, allegedly because its chairman Venugopal Dhoot had business dealings with NuPower Renewables, a firm owned by Chanda Kochhar’s husband Deepak Kochhar.
Questions were also raised on her presence in the credit committee that decided on loans and if any disclosures of the links between Dhoot and her ‘relative’ were made to the Board.
Although the board of ICICI Bank has backed its chief, ruling out any conflict of interest or quid pro quo after a review done on March 28 by all members, ICICI Bank’s stock has plunged as much as 14 percent during the last one month.
Various commentators have also raised concerns of the growing discomfort and waning faith in corporate governance in private sector firms’ boards. This also comes after Axis Bank’s board, within four months, reversed its decision on the reappointment of its CEO and MD Shikha Sharma, who will step down in December this year, reducing her fourth term from three years to seven months.
While Axis Bank has buckled under pressure from Reserve Bank of India, which had asked the bank’s board to reconsider Sharma’s 3-year term reappointment, reports suggest RBI had intervened in ICICI Bank-Videocon controversy in 2016 and is doing so again to decide the next step for ICICI Bank’s board. On the other hand, Finance Ministry is only taking updates but will let RBI decide the action plan.
Global credit rating agency Fitch Ratings issued a note last week stating the potential conflict of interest and raising questions over ICICI Bank’s governance and reputational risks. It has slammed what it calls to ICICI’s “reluctance to support an independent probe” into the matter.
Over the past two weeks, the Income Tax Department has sent a notice to Deepak Kochhar, and issued lookout notices for him at airports. The Central Bureau of Investigation (CBI) has questioned his brother Rajiv Kochhar, in relation to his firm Avista Advisory playing a role in restructuring of loans to Videocon Group, directors of NuPower and Mahesh Chandra Punglia, a longtime consultant of the Videocon Group and confidante of Dhoot.
Even as nothing has been proven so far, developments and new public records unearthed by various media reports since the allegations came to light have not captured the bank in a good light.
Further, complete silence from Chanda Kochhar since then and Chairman MK Sharma’s refusal to take any questions after a media briefing where he came out in support of her, has added fuel to the fire.
With much at stake for ICICI Group as an institution, the board may have to make more amends to restore faith of investors and depositors in the bank and towards its CEO.
Till then, the uncertainty continues to loom on her term, which if we were to go by the current scenario, could end before its expiry in March 2019.
Podcast: All you need to know about ICICI-Videocon controversy
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