Mumbai: ICICI Bank, battling a crisis following whistleblower allegations, named group veteran Sandeep Bakhshi as chief operating officer and said CEO Chanda Kochhar would be on leave till completion of the external enquiry against her in the Videocon loan matter.
Bakhshi, who currently heads ICICI’s life insurance arm, will take up a newly created position of COO at the bank for a five-year term beginning 19 June (today), pending regulatory approvals, the bank said in a statement late on Monday.
Apart from being the COO, Bakhshi would be a whole-time director and a board member. He has been with the ICICI Group for over three decades and was the deputy managing director of the bank before going to head the life insurance business in 2010. At ICICI Prudential Life, the bank's executive director N S Kannan would replace Bakhshi as the Managing Director (MD) and Chief Executive Officer (CEO).
Bakhshi will report to the bank’s board during the period of Kochhar’s leave and will be responsible for handling all the businesses and corporate centre functions, ICICI Bank said. All the executive directors of the bank and its executive management would report to Bakhshi.
"All executive directors on the board of ICICI Bank and the executive management will report to him. Bakhshi will report to Chanda Kochhar, who will continue in her role as MD and CEO of ICICI Bank," the bank said in a statement.
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. Videocon’s founders had an investment in a renewable energy company founded by Kochhar’s husband, Deepak.
ICICI Bank’s board, which had initially backed Kochhar calling the alleged nepotism charges against her “malicious and unfounded”, last month said it would institute a probe headed by an independent person into allegations raised by an anonymous whistleblower.
“In line with the highest levels of governance and corporate standards, Ms. Chanda Kochhar has decided to go on leave till the completion of the enquiry,” the bank said.
"Kochhar has decided to go on leave till completion of the enquiry as announced on 30 May. The board has noted and accepted this. During her period of leave, the COO will report to the board," the statement said.
The current tenure of Kochhar, who has been on annual leave for some time now, ends next March.
Bakshi with bank since 1986
Bakhshi started his career with the ICICI group in 1986 and has looked after the group’s corporate, retail lending and insurance businesses. He has headed ICICI Prudential Life Insurance Co Ltd since 2010 and helped take the company public in 2016.
“Bakhshi is part of the ICICI culture. So, from that perspective, he is the right choice as the senior-most person within the ICICI umbrella after Kochhar,” said Shriram Subramanian, founder of proxy advisory firm InGovern.
“That should be taken favourably by investors,” Subramanian said, although he criticised the bank’s board for not having acted more decisively in tackling the controversy.
The bank’s New York-listed shares rose 3.6 percent by 1647 GMT on the news on Monday. Its Mumbai-listed shares had closed 3.7 percent higher before the announcement.
Meanwhile, Kochhar has not commented on the issue. Her husband Deepak has denied any wrongdoing, as has the head of the Videocon group, Venugopal Dhoot.
Controversy over Videocon loan
Kochhar, a career ICICI Group employee has been under the cloud since late March, when allegations of conflicts of interest and possible quid pro quo in lending to Videocon group, along with lack of disclosures by the bank, made headlines.
Complicating matters for her, the bank received another complaint against Kochhar by an internal whistle-blower, who made allegations of not following the bank's code of conduct, late May. This led the board to announce a detailed probe by an external expert into the allegations. Retired Supreme Court judge B N Srikrishna would be heading the probe panel.
According to sources, he has accepted the request from the bank and the terms of reference for the panel are to be decided by the audit and governance committee of the bank.
While the contents of the whistle-blower's complaint are not known, the first set of allegations against Kochhar pertains to alleged impropriety while lending to the cash-strapped Videocon Group and companies associated with the Ruia family, the promoters of beleaguered Essar Group.
However, the statement from the bank did not have any mention of it.
The cases under scanner include the bank extending Rs 3,250 crore to Videocon Group in 2012 and the involvement of Chanda Kochhar's family members, including her husband Deepak, in first sanctioning the loan and then restructuring the same through Avista Advisory, a company run by his younger brother Rajiv Kochhar.
There are also allegations that NuPower -- a company floated by Videocon group and Deepak -- got investments of Rs 325 crore from the Mauritius-based Firstland Holdings, a firm owned by Nishant Kanodia, the son-in-law of Essar Group co-founder Ravi Ruia.
Earlier this month, Finance Minister Piyush Goyal said the law would take its course in the alleged case of nepotism at ICICI Bank, even though it was a good bank with "very robust processes".
Kochhar is credited for consolidating the operations of the bank after the departure of K V Kamath.