On 1 June, reacting to a Mint report that the independent directors of ICICI Bank Ltd asked managing director and chief executive officer (CEO) Chanda Kochhar to go on leave till a probe into her conduct by an independent agency is complete, the bank’s stock rose nearly 5%. The probe was announced following a whistleblower’s complaint on her alleged misconduct. After the bank denied the report and said she was on her planned annual leave, shares surrendered most of the gains.

On Monday, amid speculation on Sandeep Bakhshi, managing director and CEO of group company ICICI Prudential Life Insurance Ltd, taking over as interim boss of ICICI Bank, its stock rose by 4.07% even as the shares of its peers, Axis Bank Ltd, HDFC Bank Ltd and Kotak Mahindra Bank Ltd all declined.

Nothing else could better illustrate how the market perceives the developments in ICICI Bank. A late evening release by the bank said it appointed Bakhshi as wholetime director and chief operating officer (a new position that has been created) of ICICI Bank for five years, effective Tuesday or later, if the regulatory approval is delayed.

All business heads will report to Bakhshi, who, in turn, will report to Kochhar, who “has decided to go on leave till the completion of the enquiry".

Indeed, Kochhar’s decision to go on leave is “in line with the highest levels of governance and corporate standards," as the bank’s release says, but why did she take so long to decide on this? By delaying it inordinately, both Kochhar and the bank’s board pushed themselves into a corner and finally were left with no choice but to remind the world that they care for corporate governance.

Except for a brief appearance at a public function in Mumbai, in the past few months since the controversy flared up, Kochhar has focused on her daily chores with meticulous care and confidence until the day she went on leave. In her interaction with analysts, after announcing March quarter earnings, she gave a two-year guidance; it has been business as usual for her and ICICI Bank.

Four senior executives of ICICI Bank who have been on the board are N.S. Kannan, Vijay Chandok, Vishakha Mulye and Anup Bagchi. However, the choice for the COO’s job fell on Bakhshi (and Kannan is being shifted to ICICI Prudential), probably because he is seen as a leader who doesn’t believe in factionalism and can take the team along. Credited with taking the first Indian insurance company public, Bakhshi, 57, had recently been re-appointed as ICICI Prudential CEO for two years. He is as “cool as a cucumber" who cares for stability, says one of his colleagues.

Bakhshi cut his teeth in development banking with the erstwhile ICICI Ltd in 1986. He headed the group’s non-life insurance company ICICI Lombard General Insurance Co. Ltd for two years between March 2007 and April 2009 and became a deputy managing director and head of retail in the bank before shifting to the life insurance company in August 2010. With varied experience in project financing, risk management and corporate banking beside retail, he is perceived to be an institution builder.

Kochhar’s current term ends in March 2019. Will she come back and complete her term? Will the ICICI Bank board consider giving her another term? All these issues are in the realm of speculation at this point; we need to wait till the probe by retired Supreme Court justice B.N. Srikrishna is completed.

Even though the banking regulator Reserve Bank of India in 2016 did not find anything wrong in the bank’s lending to a particular group with which Kochhar’s husband has a business relationship, a string of probes is being conducted by multiple agencies, including the Central Bureau of Investigation (CBI), income tax department, and India’s capital market regulator. We need to wait till we hear from them.

One thing is for sure, if Kochhar does not continue beyond her current term, the bank will not look for an outsider to succeed her. Bakhshi fits the bill. If that happens, he will have at least one term as, typically, ICICI Bank bosses do not continue beyond the age of 62-63. Both N. Vaghul and K.V. Kamath, who had headed ICICI Bank before Kochhar, had stepped down in their early 60s.

By stepping aside and ensuring a truly independent probe, Kochhar has done the right thing. It would have been a great example of corporate governance had she done it much earlier. By doing it now, she gives the impression that it was not her choice—she has done it under pressure from the board which all along looked the other way. Anyway, better late than never.

Tamal Bandyopadhyay, a consulting editor at Mint, is adviser to Bandhan Bank. His Twitter handle is @tamalbandyo.

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