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Nine years after Chanda Kochhar took over as Managing Director and Chief Executive Officer of ICICI Bank Ltd. — then the country’s largest private bank by assets — she has stepped down. Sandeep Bakhshi, who is the chief operating officer of the bank, has been appointed as CEO for a period of five years, the bank said on Thursday.
Kochhar’s resignation comes even before a probe into alleged impropriety in granting of loans by the bank to the Videocon group is completed. That probe will continue, said the bank while adding that “certain benefits” would be dependent on the outcome of the investigations.
The board’s decision to accept Kochhar’s resignation is not surprising, N Vaghul, former chairman of ICICI Bank told BloombergQuint. “The bank's growth before this controversy was quite impressive... As for the controversy itself, I can say, right now they're allegations,” Vaghul said while adding that Bakhshi is a suitable candidate for the position of CEO.
Kochhar, once among India’s most celebrated bank chiefs, found herself embroiled in controversy related to loans granted by ICICI Bank to the Videocon Group. It turns out that Videocon Group had dealings with NuPower Renewables — a company promoted by Chanda Kochhar’s husband, Deepak Kochhar.
The allegations had first come to light in 2016 and resurfaced in March this year when The Indian Express detailed a series of transactions between the Videocon Group and NuPower Renewables between 2008-2013.
At first, the board of ICICI Bank rubbished the allegations and backed Chanda Kochhar. In a March 28 statement, the board of ICICI Bank said that it has full faith in her. The board termed allegations of a conflict of interest in Kochhar’s dealings with the Videocon Group as “malicious and unfounded rumours.” It went on to say that there is “no question or scope of any favoritism, nepotism or quid-pro-quo.”
But the allegations did not die down and investigations began.
On June 18, ICICI Bank announced that Chanda Kochhar will go on leave and a committee headed by Justice Srikrishna would look into allegations against her. The report of the committee is yet to be finalised.
As an interim arrangement, Sandeep Bakhshi, then CEO of ICICI Prudential Life Insurance, would return to the bank as chief operating officer, the bank said in June. Bakhshi now takes over from Kochhar as the next CEO of ICICI Bank.
ICICI Bank is not the only private lender seeing a shift in management at the top. Three banks — ICICI Bank, Axis Bank and Yes Bank — are in the midst of management transitions. Each of these banks has reported an increase in bad loans and a divergence in bad loan reporting over the course of last credit cycle — something that the RBI has frowned upon.
In April, peer Axis Bank announced that MD & CEO Shikha Sharma will cut short her term and step down at the end of December 2018. Her exit came after reports that the RBI was not keen on another full three-year term for Sharma.
Last month, Yes Bank informed stock exchanges that the RBI had allowed Rana Kapoor to continue at the helm of the bank only until end of January 2018. The bank is currently seeking an extension but also searching for a new CEO.
Should Kochhar have sought another term as CEO after her current term ended in March 2019, she too could have faced questions from the RBI. With Kochhar stepping down and Bakhshi moving into the corner office, ICICI Bank will stave off that uncertainty.
Bakhshi could bring a fresh approach to the bank, while also bringing with him the institutional memory of the group.
Like Chanda Kochhar, Bakhshi is an ICICI veteran. He joined the institution in 1986 and has held various positions within the group. In his last assignment at the bank, Bakhshi 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.
Shares of ICICI Bank closed 4 percent higher in trade on Thursday. Kochhar's decision to step down removes a major overhang for ICICI Bank, said Macquarie Research in a note.
This story was published in BloombergQuint.)
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