By Elton Gomes
ICICI Bank has begun to look for a successor to chairman M.K. Sharma, who’s term ends on June 30. According to sources privy to the matter, the ICICI Bank board has to decide whether the chairman can be appointed from the existing pool of independent directors or by calling on an outsider to fill in the position, Live Mint reported.
Among a list of several directors, former Bank of Baroda chairman and director M.D. Mallya is rumoured to be Sharma’s replacement. Other independent directors include Uday Chitale, Dileep Choksi, Neelam Dhawan, Radhakrishnan Nair, V.K. Sharma (LIC chairman), and Lok Ranjan (government nominee director).
ICICI Bank has been in the news recently over allegations against its CEO and MD Chanda Kochhar for allegedly giving out loans to benefit family members. On May 30, Bloomberg Quint reported that the bank would conduct an independent investigation into an anonymous whistleblower’s allegations against Kochhar.
ICICI Bank and Videocon Group
The bank’s troubles began in October 2016 courtesy of a blog post written by Arvind Gupta, an investor in ICICI Bank and the Videocon Group. In the blog post, Gupta attached a letter written to Prime Minister Narendra Modi that raised some issues concerning the bank’s conduct. Gupta claimed that Kochhar’s husband, Deepak, had business relations with Venugopal Dhoot, who is the chairperson of the Videocon Group, which could imply a conflict of interest.
The Reserve Bank of India (RBI) investigated the matter but failed to find any troubling evidence against ICICI bank’s top management. The RBI then forwarded the matter to the Finance Ministry stating that further investigations were needed, as reported by Bloomberg Quint.
Social media was churning with rumours in March 2018 about a possible probe against the directors of two private sector banks. Although media reports did not name the heads of the banks, it was believed that Chanda Kochhar was one of the two.
On May 7, 2018, the ICICI Bank board met to discuss the results in the January-March quarter. Lok Ranjan, the government nominee, was expected to bring up the issue about Videocon, but Ranjan did not attend the meet. Chanda Kochhar later told the press that the board did not discuss the issue, as per Bloomberg Quint.
In a May 25 statement, ICICI bank confirmed that Kochhar had received a show-cause notice from the Securities and Exchanges Bureau of India (SEBI). The bank stated that the notice was with regards to information given by the bank and its officials in the Videocon Group loan case.
Chanda Kochhar goes on leave
On May 31, the ICICI Bank board ordered an independent inquiry into Gupta’s allegations against Kochhar. Persons knowledgeable of the matter said the bank’s board was planning to complete the investigation while Kochhar is on leave.
“These things are completely documented. Whether she is present or absent does not make any difference, you cannot change these records as they are all computerized,” a person privy to the matter told the Economic Times.
However, ICICI Bank dismissed all reports that said the bank had asked Kochhar to go on an indefinite leave till the inquiry was complete.
The bank’s spokesperson said in a statement: “The ICICI Bank Board denies having asked Ms. Chanda Kochhar to go on leave. She is on her annual leave which was planned in advance. Further, the Board denies that it has appointed any search committee to find her successor,” the Economic Times reported.
Arvind Gupta writes another letter
Amidst the back and forth concerning Kochhar’s leave, on June 2, more trouble mounted up for her as whistleblower Arvind Gupta leveled new allegations. According to news agency PTI, Gupta alleged that Ruia brothers of the Essar group received undue favours from ICICI Bank for for “round-tripping” investments into the NuPower Group, which is headed by Deepak Kochhar.
In a new letter dated May 11, 2018, to Prime Minister Narendra Modi, Gupta alleged that the Ruias funded NuPower and its subsidiary by “subscribing to compulsorily convertible preference shares and equity shares,” as reported by PTI.
ICICI Bank’s reputation suffers
On June 4, SEBI issued a show-cause notice to Kochhar for not adhering to its code of conduct, wherein disclosure of any conflict of interest involving Videocon and NuPower was important. The notice further mentioned that the bank indirectly violated SEBI’s disclosure norms by not disclosing information of a conflict of interest.
Kochhar’s banking career is in serious jeopardy after the unceasing allegations. Although the ICICI Bank board has termed the allegations as “malicious and unfounded rumours,” the bank’s reputation has taken a severe hit. An Economic Times report mentioned that some directors from the ICICI Bank board were to discuss the way ahead for Kochhar. Throughout the ongoing episode, Kochhar has been strongly backed by the ICICI Bank board, however that support appears to be on the decline.
Elton Gomes is a staff writer at Qrius.
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