Can Sandeep Bakhshi help ICICI Bank get a makeover?

IN PICS | Chanda Kochhar: A look at the illustrious career of the embattled CEO of ICICI Bank

Bakhshi, like Kochhar, is an ICICI veteran who joined the institution in 1986. In his 32-year finance career, Bakhshi has gained varied experience in banking and insurance.

In his last assignment at the bank, Bakhshi, 58, was deputy managing director and head of retail and wholesale operations. In August 2010, Bakhshi was appointed MD and CEO of ICICI Prudential Life Insurance Company.

A close associate of Kochhar, Bakhshi was deeply involved in the day-to-day functioning of the Bank since he joined. He has experience across retail banking, project appraisals as well as risk management and has handled large corporate clients at the bank.

Also Read: COMMENT | Like Kochhar, the ICICI Bank board should go on leave, but permanently

Under Bakhshi, the insurer’s persistency ratio by policy improved from 10.7 percent in FY14 to 49.1 percent in FY18. This means out of every 100 policies, 49.1 percent are in the books being serviced even after the fifth year.

While many see him as an outcome-oriented leader who achieves financial numbers with calm nerves, Bakhshi has experienced his share of controversy relating to an  FIR filed last year against the insurer's officials over  mis-selling of life insurance policies in Rajasthan.

In 2005, five of the insurer’s employees in New Delhi were also jailed for launching a “Jehad” sales campaign in which they glorified Osama bin Laden and his “focused determination” in an effort to increase business by likening successful policy sales to “kills”.

“With such allegations, he is a poor choice to come as the COO of ICICI Bank...There is less confidence in the board for now,” said independent market analyst Hemindra Hazari.

A senior banking analyst added, "The FIR on mis-selling may not impact Bakhshi's performance in the bank but maybe he will take time to settle in the bank as maybe a Kannan or someone within the bank could have done. We will still need to wait for his strategy."

Hence, Bakhshi’s appointment is a "step better", yet many questions at the top management and bank's operations have been unanswered.

Task ahead for Bakhshi

Mired in controversy, ICICI Bank which is the country's third largest bank by assets and largest private lender, has a lot of cleaning up required. Most importantly, to revive the image and investor confidence at the bank.

As per a report, at least three foreign investors, including Baillie Gifford and Co, Abu Dhabi Investment Council, Noosa, and Commonwealth Bank of Australia, have cut their shareholdings in ICICI Bank.

Additionally, areas of non-performing assets (NPAs) or bad loans and deterioration in asset quality, slow corporate and small and medium sector enterprise (SME) credit growth, dwindling profitability will require a major shake-up.

The bank’s March 2018 quarter net profit stood at Rs 1,020 crore, its lowest in the last eight quarters.

Gross NPA ratio rose to 8.84 percent in Q4FY18 from 7.89 percent in the year-ago quarter with additions of Rs 15,737 crore to bad loans in the three months. Net NPAs had marginally declined to 4.77 percent and the bank aims to reduce this number to 1.5 percent by March 2020.

"While Mr. Bakhshi has strong credentials backing him to lead the bank, the preference of internal candidates to lead various business operations continues at the bank," said a report by Kotak Securities.

Bakhshi's journey

A mechanical engineer from Punjab and an XLRI alumni, Bakhshi led ICICI Pru Life to become the first listed insurance company in India and undertook a digital transformation that included the tab-based selling concept.

Group officials say that ICICI Prudential Life entered the insurance industry at a time when Life Insurance Corporation (LIC) was the sole player in life insurance.

At present, the insurance company is among the top three private life insurance companies and largest private sector non-life insurer by premiums collected with a strong presence among high-networth individual (HNI) clients.

Apart from the insurance entities where he held top roles, Bakhshi served as an Executive Director of ICICI Bank from May 2009 to July 2010 and as a director on the Bhushan Steel board for three years until 2009.

On the personal front, he's a wildlife enthusiast, has cleared the National Defence Academy tests but did not pursue it. Instead, he went on to join computer marketing company ORG Systems in 1983.