Chanda Kochhar on failure of corporate governance in ICICI Bank

1. CHANDA KOCHHAR

2. INTRODUCTION
– Chanda kochhar is the former MD and chief executive officer of ICICI Bank.
– She is widely recognized for her role in shaping the retail banking sector in india and
for her leadership of the ICICI Group, as well as her contributions to various forums
in india and globally.
– In 2014, she has been named among fortune’s 50 most powerful women in business
women in the fourth consecutive year. Under the leadership of kochhar, ICICI has
transformed itself from corporate bank into a retail bank, and now a universal bank.

3. PROBLEM: WITH CHANDA KOCHHAR
– Question of Propriety:
– Now, for the first time, she has her back to the wall. And her silence is as surprising
as it is eloquent.
– Yes, the board of directors has come to her support. Their defence is on these
lines- there was no conflict of interest as Videocon was not an investor in NuPower,
the joint venture; that the credit committee had many independent directors; that
the loan was part of a consortium; and that she made disclosures as required
under various laws.

4. CONTD.
– The arguments are cleverly worded but this is an issue that was never only about legality. It
was about Ethics. Propriety demanded that she should have disclosed to the board her
‘interest’ in the Videocon loan on the grounds that her husband had a business dealing with
the group.
– Second, the highest standards of Corporate Governance demand that she should have
recused herself from the discussion at the board and voting on the deal.
– To merely say that the board committee sanctioning the loan was chaired by someone else or
that the committee had many independent directors doesn’t let her off the hook. A proposal
worth Rs3250 Cr doesn’t get passed at the board level in any bank without it being backed or
pushed by top officials.

5. PROBLEM: WITH DEEPAK AND DHOOT
– In this case, the agency had registered a PE about two months ago into dealings between Deepak
Kochhar, Dhoot and unidentified bank officials.
– The complaint in this regard was first made by investor Arvind Gupta in 2016 in a letter to the PM,
the Enforcement Directorate, the CBI, the Reserve Bank of India and other government agencies,
seeking a probe into the matter.
– The ICICI bank has twice refuted(rejected) allegations that it had given a loan to the Videocon Group
due to the group’s dealing with the bank CEO’s husband.
– Bank Chairman MK Sharma said Chanda Kochhar had made all the necessary disclosure. The bank
said that it was only one of consortium of 20 lenders led by State Bank of India that had granted
about Rs40000 Cr in loans to the Videocon Group. It said the amount lent by ICICI bank was less
than 10% of the total amount.

6. PROBLEM: WITH RAJIV KOCHHAR
– The CBI questioned ICICI bank CEO Chanda Kochhar’s brother-in-law Rajiv kochhar in
connection with a preliminary enquiry(PE) into allegations of nepotisms and corruption in
loans granted by the private sector lender to the Videocon Group.
– Questioned and then let off.
– This came days after the agency questioned a few ICICI Bank executives to ascertain whether
there was any wrongdoing in the bank issuing a Rs. 3250 cr. loan to Videocon Group in 2012.
– Rajiv Kochhar, an NRI is the CEO of Singapore-based Avista Advisory Group which advises
companies on financial restructuring, mergers and acquisitions and fund-raising

7. CONTD.
– It was alleged that the company may have benefited from its founder’s relationship with the ICICI
Bank CEO and got the mandate to restructure foreign currency-denominated debt deals of seven
companies, all borrowers of the bank, as part of quid pro quo.
– It was further alleged that the company may have got a commission of as much as 5% for brokering
loans from ICICI Bank.
– Kochhar had denied any links with the ICICI Bank and allegations of any wrongdoing.
– He had said that his company dealt with only international investors and not Indian banks, and that
he did not do business with his brother Deepak, Chanda Kochhar's husband and founder director of
NuPower Renewables, so there was no question of favoritism and conflict of interest.

8. CONCLUSION
– The Central Bureau of Investigation named Chanda Kochhar and her husband as
beneficiaries in the financial fraud. The Justice B N Shrikrishna probe panel reported that
Kochhar had violated ICICI Bank's Code of Conduct, following which her service was
terminated with all her entitlements and benefits revoked.
– The damage to her as well as the bank’s reputation is colossal. Her moral standing and
ability to demand total integrity from her staff and her effectiveness as a leader stands
weakened. And the damage goes beyond just affecting the morale of the bank staff.
What about those who looked up to her as a role model and aspired to reach the top?

9. THANK YOU
BY
SHRADDHA AGRAWAL
BBAG-17037