Chanda Kochhar: The Rise and Fall of a Banking Giant

Chanda Kochhar, who was arrested on Friday on a cash fraud scam, was once a powerful banker and instrumental in turning ICICI Bank into the country’s largest private lender.

Chanda Kochhar

Kochhar, who regularly features on Forbes lists of top global honchos, was arrested by the Central Bureau of Investigation (CBI) along with her husband Deepak Kochhar in connection with alleged fraud and irregularities in loans made by ICICI Bank to companies approved by the Videocon Group. The Kochhars were called to the agency’s headquarters and arrested after a brief interrogation.

Her chapter at ICICI Bank ended abruptly in 2018 when the board approved a motion by Kochhar to take early retirement after allegations of corruption and quid pro quo while also lending to the now-bankrupt Videocon Industries.

Kochhar, who has risen to become the corner office of the private sector’s largest lender, has been mired in allegations of conflicts of interest, lack of disclosure and quid pro quo as he made loans to Videocon. In fact, she was the first woman to head a major lender in the country.

A favorite of the group’s then-chairman KV Kamath, Kochhar joined ICICI, an infrastructure lender in its former guise, in 1984 as a management trainee.

When it was converted into a commercial bank in the early 1990s, it played an important role in its transformation into a retail-focused lender.

In 2009, despite a strong leadership team, she was selected to succeed the larger-than-life Kamath as CEO and CEO.

Her elevation also resulted in the exit of Shikha Sharma (former head of Axis Bank), who outranked her in the group.

Prior to her appointment to the corner office, she was a key member of the bank’s senior management team, leading retail banking and also serving as chief financial officer.

While Kamath faced many bank runs during his tenure, Kochhar’s tight control of the institution brought a complete halt to this negative press.

There was only one bankrun incident during her tenure.

When an RBI review in 2015 found a large volume of unreported duds at the bank, it announced a new strategy to focus only on well-rated borrowers.

She was also active in many social causes, but it was her inspirational rise to the top that was most admired.

Still, she confused many with her opposing views that girls lack quantitative analytical skills, resulting in a limited number of women in B schools.

Over the years, her leadership of the bank became a hyphenated relationship, in which she defined ICICI Bank, until announcing her formal exit six months after allegations of inappropriateness first surfaced, despite being on an indefinite leave of absence after leaving the board was forced to conduct an external investigation into the entire issue.

The reasons for her downfall relate to a loan to Videocon and the business relationship between her promoter Venugopal Dhoot and her husband Deepak Kochhar. Dhoot had invested in and subsequently exited an energy company backed by Deepak, and Chanda Kochhar has not withdrawn or disclosed when ICICI Bank provided a loan to Videocon as part of a consortium.

She initially enjoyed the full support of the board, but lost support as the list of allegations grew and more names, such as a shell company belonging to the Ruias Essar Group, emerged among those with which the Kochhar family was connected.

However, the profits from the Ruia ties were only a fraction of Videocon’s Rs 3,250 crore loan in FY2011, which soon turned out to be a dud.

These allegations led to investigations by multiple agencies, including the CBI, ED, and SFIO.

In the end, it was the complaint of a whistleblower, who has yet to be named, that was fatal to her.

After initially exonerating them in the face of Videocon’s allegations, the bank launched an independent investigation by retired judge BN Srikrishna, and Kochhar was placed on indefinite leave pending investigation.

This resulted in Sandeep Bakhshi being appointed Chief Operating Officer to oversee day-to-day operations.

Kochhar had six months left before her current term expired in March 2019.

The rules allow private sector bank chiefs to work until the age of 70. Your resignation offer has been accepted with immediate effect.

In recent months, shareholders have sought clarity on this issue at annual meetings, and have also raised concerns about the bank’s move to appoint her to chair the group’s securities arm.

Kochhar, who had a large public profile, had been kept away from the public eye since her forced leave.

When it acquired ICICI Bank, it was the second largest in the system from a performance perspective and the largest among its private sector peers.

But by the end of her career, she slipped to a distant third place in the industry and the second largest private lender behind HDFC Bank.

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