Mumbai: Minority investors in ICICI Bank Ltd say that while the bank board is taking steps in the right direction to restore investor confidence, these steps are not enough. These steps are too late and might be “too little", five mutual fund managers, who hold stakes in ICICI Bank, said on condition of anonymity as they are not authorized to speak about individual companies. “It is too soon to open a bottle of champagne," said the equities head at a large fund house. “These steps have come in too late."

The ICICI Bank board on Monday appointed ICICI Prudential Life Insurance chief executive officer (CEO) Sandeep Bakhshi as whole-time director and chief operating officer (COO), to steer all its businesses. Chanda Kochhar, ICICI Bank’s managing director and CEO, will remain on leave till a panel headed by Justice B.N. Srikrishna completes its investigations into allegations of conflict of interest and quid pro quo against Kochhar in the Videocon loan case.

ICICI Bank CEO Chanda Kochhar. Photo: Abhijit Bhatlekar/Mint
ICICI Bank CEO Chanda Kochhar. Photo: Abhijit Bhatlekar/Mint

Also read: ICICI Bank CEO Chanda Kochhar’s fully paid indefinite leave raises questions

Justice Srikrishna is likely to take the aid of lawyers and forensic auditors, said a person familiar with the developments, who did not wish to be named. Justice Srikrishna is also being assisted by Uday Chitale, an independent director on the board, to probe the allegations.

Bakhshi, who took charge on Tuesday, will report to the CEO. While Kochhar is on leave, he will report to the bank’s board.

A second fund manager said they require clarity on both governance and leadership for investment decisions.

“Distancing Chanda Kochhar from the bank during the probe is a good governance step, but this is just one part of it," the fund manager said. “The leadership is still not clear. The appointment of Sandeep Bakhshi looks like an interim measure as no other internal or external candidate was looked at before choosing him."

ICICI Bank COO Sandeep Bakhshi.
ICICI Bank COO Sandeep Bakhshi.

A third fund manager, who heads equities at a different fund house, holds a similar view. “What if the Srikrishna committee finds that nothing was wrong with Kochhar? It’s an allegation, which after all is hard to prove from a legal standpoint," the fund manager said. “If she gets a clean chit, Kochhar can be back and then who knows if Bakhshi will report to Kochhar. The present structure that is put in place could very well be temporary. Nobody knows for sure. Kochhar has not yet left the building."

However, another fund manager thinks Bakhshi’s appointment could be a permanent one.

“This is a move forward. As the board has also moved N.S. Kannan to ICICI Life Insurance, Bakhshi’s appointment doesn’t seem interim. This is not a cosmetic change," the fund manager said. “We now need to see if Bakhshi accelerates the cleaning up of the bank’s loan book."

Also read: Will Sandeep Bakhshi do a PruLife at ICICI Bank?

Fund managers say they also need clarity on the timeline for completion of the probe.

“The bank has so far not informed us or made a disclosure on how long the probe would last. For certainty, we might ask the management to give us a timeline," said the second fund manager quoted before. The fourth fund manager cited above is also sceptical about how much difference Bakhshi’s appointment would make.

Also read: Dear ICICI Bank board, giving a red card to Chanda Kochhar is not enough

“How much Bakhshi would do in terms of a clean-up remains to be seen," the fund manager said. “Bakhshi is an insider and a lifer at ICICI group and, therefore, may not wash dirty linen in public. If an outsider had been appointed in Bakhshi’s place, he would have performed the surgery. The board hasn’t exactly covered itself in glory in this episode."

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