ICICI looks to elevate independent director M D Mallya as chairman
: ICICI Bank Ltd has sought the Reserve Bank of India’s (RBI’s) approval to name independent director M D Mallya as the next chairman of India’s second largest private bank, whose board has been criticized for letting a crisis at the bank fester.
Mallya, a former chairman of Bank of Baroda, joined the ICICI Bank board on May 29, and the lender sent his name to RBI in the first week of June, an executive familiar with the development said, requesting anonymity. The term of current chairman M.K. Sharma ends on June 30.
“I believe the proposal was sent to RBI after discussing with the board,” said the executive. “The majority of the board is in favour of Mallya as the chairman. The RBI decision has to concur with board’s proposal in such matters. (Still) the bank is yet to hear from RBI.”
Mint could not independently ascertain the reason behind the delay in approval from the RBI.
It remains to be seen if the changes at ICICI Bank, which faces reputational risks on account of charges of impropriety against chief executive Chanda Kochhar, will be enough to soothe concerns as the bank battles to convince investors to keep faith in the stock.
From January 1 until June 20, ICICI Bank’s shares have fallen 6.7%, underperforming the benchmark Sensex and BSE Bankex index, which gained 4.35% and 2.89%, respectively.
Emails sent to RBI and ICICI Bank seeking comment went unanswered.
On Monday, ICICI Bank named ICICI Prudential Life Insurance Co. Ltd CEO Sandeep Bakhshi as whole-time director and chief operating officer to steer all its business. Kochhar is on leave until a committee investigating allegations of impropriety completes its work.
If Bakhshi does succeed Kochhar, he will work with a reconstituted board that is markedly different from the one at the beginning of the year.
The current 13-member ICICI Bank board comprises seven independent directors, one government nominee and five executive directors, and is headed by Sharma. With his current threeyear term ending in less than 10 days, about half of the board members in July will be people who were not with the bank at the start of the year.
Since January, three independent directors—Homi Khusrokhan, Tushaar Shah and V. Sridar—have retired after completing their tenure of eight years as prescribed under the Banking Regulation Act. They were replaced by Uday Chitale, Radhakrishnan Nair and Mallya.
In April, the government replaced its nominee Amit Agarwal with Lok Ranjan without giving a reason. ICICI Bank on Monday also appointed N.S. Kannan as the new CEO of ICICI Prudential Life Insurance, the reason Kannan is not on the board.
Like Kochhar, whose current five-year terms ends in March next year, independent director and head of the nomination and remuneration panel Dileep Choksi’s term also ends in March. It is not clear if ICICI Bank will seek the re-appointment of Choksi, who turns 70 next year, as RBI bars an independent director who has turned 70 from being reappointed.