The decision to ask Chanda Kochhar to go on indefinite leave was taken on advice of a majority of the 7 independent directors onICICIBank board
Mumbai: ICICI Bank CEO Chanda Kochhar has been asked to proceed on indefinite leave from the company she has helmed for almost a decade until an independent enquiry announced by the lender’s board to probe alleged cases of impropriety is concluded, according to a person with direct knowledge of the board’s decision.
The decision to ask Kochhar to go on leave has been taken on the advice of a majority of the seven independent directors on the bank’s board, the person said. The enquiry, likely to be headed by a retired judge of the Supreme Court, will begin next week and will be completed in two months, he added.
“A new whistleblower complaint came 15-20 days back. It came to our notice as well. The bank’s board and top management first met and then the independent directors decided to meet separately. So the independent directors met on 29 May. The charges made against the bank and its CEO are quite harsh and the independent directors thought that such allegations cannot be dealt with internally," the person said on condition of anonymity.
An ICICI Bank spokesperson did not respond to emails sent on Thursday evening.
In an exchange filing on Friday, ICICI Bank said that the board has not asked Kochhar to go on leave. “She is on her annual leave which was planned in advance," the exchange filing said.
Kochhar’s leadership has come under a cloud following the resurfacing of allegations against her, including alleged conflict of interest over loans made to Videocon Group, whose chairman Venugopal Dhoot had business links with her husband Deepak Kochhar. The allegations first surfaced in 2016 but the bank’s board had given her a clean chit following an internal investigation.
“After the previous whistleblower complaint in 2015-16, the board had conducted an internal probe but we can see that it did not help much. Shareholders, depositors, employees and everyone associated are still in doubts and raising various questions despite that probe. Hence, this time the independent directors decided to tell the bank to conduct an independent enquiry," the person said.
Although there was pressure from some institutional shareholders, the bank did not order an independent enquiry so far because the board was divided on the issue, said the person.
“But the latest whistleblower charges, which are somewhat similar to the charges made by a whistleblower in 2016, compelled the independent directors to look for an external independent probe. Additional independent directors have been brought in by the bank," added the person.
Over the past two months, the bank has replaced two independent directors. It added a new one on Tuesday.
The fresh probe will examine all the details since Kochhar’s appointment in May 2009, the person said, adding that the work of all committees in the bank, the top management, directors, their interactions with each other and customers through emails or phones will be scrutinized.
The independent directors have also discussed with other board members a succession plan if Kochhar decides to quit prematurely or if any wrongdoing is discovered in the course of the independent enquiry, the person said.
“The bank, apparently, has told some of the shareholders and directors that an expert headhunter will be appointed for shortlisting a new CEO for the bank. The bank’s business is not bad, but the reputational risk is too high right now," added the person.
The new whistleblower complaint came soon after the bank’s board met on 7 May, said another person directly aware of the development.
On 28 March, the ICICI Bank board had issued a statement reposing its confidence in the corporate governance of the lender and the integrity of Kochhar. The board was aware of a 2016 Reserve Bank of India probe on this issue and considered that information before giving her a clean chit.
Editor’s note: This story has been modified from its original version to incorporate ICICI Bank’s filing with the BSE regarding CEO Chanda Kochhar being asked to go leave.