In 1999, Chanda Kochhar, then a general manager and head of the major clients group at Industrial Credit and Investment Corp. of India Ltd or ICICI—the former avatar of ICICI Bank Ltd—made a presentation to her managing director and CEO K.V. Kamath. The topics were changing reporting structure, cutting down time for product development, ending duplication of efforts and other ideas for optimization. At the end of the hour-long presentation, Kamath gently asked her who had given Kochhar the go-ahead for the study. Kochhar fumbled, groped for words, and finally confessed—she had not taken anybody’s clearance. Kamath loved her answer. Nine years later, Kochhar, 47, is all set to move into the corner suite, replacing Kamath and becoming the youngest CEO in the bank’s 54-year history. She is currently the bank’s joint managing director.
The pair first met 25 years ago. It was in March 1984 that Kamath, then group head of both the leasing and strategy divisions of ICICI, interviewed the fresh MBA for the post of management trainee. “He did not ask any academic questions. He was probing and the focus was more on common sense and practical issues,” reminisces Kochhar, as she nibbles on a raw papaya salad at Mumbai’s Taj President hotel’s Thai Pavilion restaurant. Kochhar is dressed in one of her signature saris—this one is a pink bandhani—and matching gold sandals.
First lady: Kochhar was the first employee on the rolls of ICICI Bank. Jayachandran / Mint
There have been much better times for anyone to take over as chief executive of a large bank, as Kochhar will soon. Bad loans are growing against the backdrop of an unprecedented global credit crunch, and ICICI Bank is now shrinking its balance sheet. To boot, the bank’s shares have underperformed for over a year now. Till early last year, the bank was India’s most valued one in terms of market capitalization, comfortably ahead of the much larger State Bank of India (SBI) despite a smaller asset base. But in the past 12 months, ICICI Bank’s shares have lost around two-thirds of their value.
Kochhar, however, isn’t one to be ruffled by sudden changes in plan. In 2000, Kamath asked her if she’d move from the corporate operations to the retail side of the business. It was a steep move— corporate loans at that time accounted for around half of the balance sheet and an even larger portion of profits. Retail was less than 1% of the business. Kochhar took a day to think before accepting.
Over the next six years she ramped up the retail business to about 67% of the bank’s balance sheet. “Domain knowledge helps, but only to a certain extent, and the available data is never complete. We need to depend on logic, gut feel and our ability to react. There is risk and one must take risks,” Kochhar says, explaining her methods.
After we order the main course—red Thai curry, steamed rice and some noodles—I ask her what ails the bank. Why are depositors perennially worried about their money and why do investors dump the stock often on sheer rumour? Why does she have to appear on TV so often to reassure the world?
“We have always done things ahead of time. We started (the) retail business when others couldn’t even dream of it. We went international ahead of others. There is always scepticism (about ICICI Bank),” she says. Do her TV appearances help? “They do, because we have a very broad consumer base— from very large corporations in metros to small farmers in Tamil Nadu. We are a very complex organization and communication is a challenge.”
Looking back, and in the light of recent hardships for banks, does she regret being involved with any of the businesses? Kochhar gathers her thoughts before replying: “Perhaps we could have got out of the small-ticket personal loan business earlier. We did it last year but it could have been done one year before. Collection is difficult. The consumers of these loans are not used to the payment rigour.”
What about credit-linked notes, credit default swaps and other structured products where ICICI Bank lost money? “We were never there in a big way. We were just testing (the) waters, learning. The market turned bad suddenly but we moved out pretty fast. One must know when to cut positions.”
Now that she is taking over as CEO, what is top on her agenda? Will she spend time correcting mistakes? “There was no big mistake. We grew at a scorching pace when the interest rates were low and the economic climate was different. Now, we need to do things differently,” Kochhar says, dismissing the idea that her actions will be corrective in nature to start with.
As part of the new strategy, she wants to increase low-cost current and savings accounts, or CASA. This is around 26% of the bank’s deposit portfolio now. If CASA grows, the cost of deposits comes down and a bank’s net interest margin—or the difference between what it spends on deposits and earns on loans—goes up. Also the bank will roll out 600 branches this year, taking its total branch network to 2,000, thereby reducing its dependence on direct sales agents.
Kochhar also sees “muted” growth in overseas assets, which currently account for around 25% of the bank’s overall assets— around Rs3.92 trillion. “Overseas, we have been depending on public deposits, bonds and inter-bank borrowings to build assets. The cost of bonds is high. We will use deposits to replace bonds,” she says, virtually laying the blueprint of a new ICICI Bank on the table.
There is no time for dessert as she has to rush to a meeting. With time running out, I jump to a critical question: Won’t she find it difficult to run the show as quite a few seasoned ICICI hands, heads of group companies, are planning to quit after she becomes the boss?
“Even if such things happen there won’t be any destabilization in the group. We have a huge talent pool. My advantage is that I have worked with most people in the organization as I had been through almost all divisions.”
And indeed, Kochhar has seen most divisions in the bank. As a management trainee earning Rs2,300 a month, she was part of a projects group that oversaw industries such as textiles, paper, sugar and petroleum, and was named a junior officer three months before her training period ended. She built the bank’s retail business from scratch and she was also ICICI Bank’s first employee. In 1993, after the financial institution got the central bank’s nod to float the bank, she worked on the concept, recruited from 40-odd different organizations, selected the core software platform, and even designed the bank’s first chequebooks.
Finally I ask about her fetish for saris, jewellery and pearls. Be it meetings with institutional investors or regulators, Kochhar is always seen in a sari. Kochhar says it’s because the sari is the “most graceful attire for women”. As for jewellery: “I have no particular fetish for pearls. I love all kinds of jewellery. I love to coordinate my clothes, jewellery, pair of sandals. I spend time on that. At heart, I am still a middle-income family girl who loves good clothes.”
As we get up, I ask the obvious last question: How difficult will it be to fill Kamath’s large shoes? “I will do the job to the best of my ability. I won’t need to fill anybody else’s shoes. All of us must create our own shoes and make sure that we don’t trip.”
Curriculum Vitae | Chanda Kochhar
Born: 17 November 1961
Education: BA in Economics, Jai Hind College, Mumbai; master’s in management studies, Jamnalal Bajaj Institute of Management Studies, Mumbai
Work Profile: Joined the erstwhile ICICI Ltd as a management trainee in 1984. Currently joint managing director, ICICI Bank Ltd; will take over as managing director and CEO on 1 May
Management Mantra: A passion for excellence; always do better than the best. If she were not a banker: Kochhar would have become an Indian Administrative Service officer
Favourite Pastime: Watching Hindi films during the weekend—if not on the release date itself—at Inox multiplex, Nariman Point, Mumbai