ICICI Bank in damage control mode, appoints former SC judge to probe Chanda Kochhar's role

Srikrishna is part of several panels and committees formed by the government. He is currently the Chairman of Financial Sector Legislative Reforms Commission (FSLRC) and also heads a committee that is working on creating a data protection framework for India.

He has famously headed the 'Srikrishna Commission' that investigated the cause of the Bombay riots in 1992–93.

Srikrishna’s role in ICICI Bank
On May 29, the bank’s board of directors instituted an enquiry to be headed by an 'independent and credible person' to examine and enquire into an anonymous whistle-blower complaint.

The complaint suggested Kochhar did not adhere to the 'code of conduct' of the bank and led to a 'conflict of interest' in dealing with certain borrowers.

ICICI Bank’s audit committee, led by board member Uday Chitale, would assist the independent probe, Srikrishna told television channels.

Srikrishna will also work with the bank’s independent directors, forensic auditors and lawyers to probe transactions related to the case.

Media reports suggests the bank plans to set up a committee to find Kochhar’s successor. ICICI Bank refused to respond to any of the emailed queries in this regard.

As of now, Kochhar is on annual leave, the duration of which is unknown. The bank's board denies having asked Kochhar to go on leave.

“She is on her annual leave which was planned in advance. Further, the board denies it has appointed any search committee to find her successor,” the bank said in a notification to the exchanges at the beginning of this month.

Also Read: ICICI Bank is a 'good bank', law will take its course, says interim FM on loan controversy

ICICI Bank-Videocon case
At the end of March, the issue first came to light that Kochhar provided loans to Videocon Group, whose promoter had investments in NuPower Renewables, a company owned by her husband Deepak, suggesting quid pro quo in the loan deal.

The accusation has been raised by two whistle-blowers: 1) In October 2016 by a shareholder; and 2) By an anonymous person from within the bank who wrote to the board of directors.

Allegations suggest the NuPower received equity and debt investments from Mauritius-based entities in which Deepak Kochhar’s brother also benefited.

Questions were also raised on whether any disclosures were made by Chanda Kochhar to the board at the time of sanctioning of loans to the Videocon Group.

However, the board has given a clean chit to Kochhar based on an internal enquiry after the reports first surfaced.

So far, it has ruled out any influence or wrongdoings by Kochhar terming the allegations as 'malicious and unfounded rumours'. It also went on to say that there is 'no question or scope of any favouritism, nepotism or quid-pro-quo.'

On Friday, global ratings agency Fitch downgraded ICICI Bank's 'support rating' to '3', from '2', apart from revising down its support rating floor to 'BB+', from 'BBB-'.

In a note, it said the bank exhibits risk controls and 'an ongoing investigation at ICICI Bank on extending a loan with a potential conflict of interest has also focused authorities' attention on the bank's governance.'

ICICI Bank shareholders have lost about 12 percent of their value in 2018 so far, whereas the BSE Sensex is up two percent in the same period.

Kochhar’s silence may have created a lot of uncertainty for the bank as on now. But shareholders will have to wait for findings from the Srikrishna’s probe panel and whether it will be a damage control for the bank and Chanda Kochhar herself.