CHANDA ON A STICKY WICKET, BOARD SPLIT

ICICI Bank board divided over continuing with Kochhar in view of allegations of impropriety

ICICI Bank CEO Chanda Kochhar is not able to throw her weight around anymore in the board, which less than two weeks earlier had expressed full faith in her leadership. Media reports suggest that the board is divided over whether to ask her to step down over allegations of impropriety in loans extended to the Videocon group.

The allegations of nepotism against Kochhar have put a question mark on the bank's corporate governance. Rating agencies fear the ongoing investigations will undermine investor confidence in the bank, and have potential implications for funding costs and liquidity.

Late last month, the bank admitted that Kochhar did not recuse herself from a credit committee meeting which decided to give a Rs 3,250 crore loan to the Videocon Group in 2012.

It is understood that at least some outside directors are not favourably disposed towards her. The board of India’s second-largest private sector bank may meet as early as this week to consider its next course of action. Kochhar’s current tenure as CEO is set to end on March 31, 2019.

There are six independent directors on the ICICI board, including the bank’s chairman as well as the head of State-owned Life Insurance Corporation of India, which owns about a 9.4 percent stake, according to data compiled by Bloomberg. The board also includes a government nominee and five executive directors from the ICICI.

Of course, the RBI, the regulator, will take the final call. The Finance Ministry is not inclined to interfere in the matter.