Chanda Kochhar: Rise and Fall of a Banking Titan

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Chanda Kochhar, who was arrested for a loan money scam on Friday, was once a powerful banker and instrumental in making ICICI Bank the country’s biggest private sector lender.

Chanda Kochhar

Kochhar, a regular figure on Forbes’ global kingpin lists, was arrested by the Central Bureau of Investigation (CBI) along with her husband Deepak Kochhar in connection with alleged cheating and irregularities in loans sanctioned by ICICI Bank to Videocon Group companies. The Kochhars were called to agency headquarters and arrested after a brief interrogation session.

His chapter at ICICI Bank ended abruptly in 2018 when the board of directors approved a request by Kochhar to seek early retirement following allegations of corruption and quid pro-quo in providing loans to the now-bankrupt Videocon Industries.

Kochhar, who once held the top job at the largest private sector lender, was bogged down by allegations of conflicts of interest, lack of disclosure and quid pro quo when lending to Videocon. She, incidentally, was the first woman to command a major creditor in the country.

Kochhar, a favorite of then group chairman KV Kamath, joined ICICI, an infrastructure lender in its former avatar, as a management trainee in 1984.

It went on to play a major role in its transformation into a retail-focused lender when it transformed into a commercial bank in the early 1990s.

In 2009, she was chosen to succeed the great Kamath as Managing Director and Chief Executive, despite a strong leadership bench.

Her rise also led to the departure of Shikha Sharma (former head of Axis Bank), who was older than her in the ranking of the group.

Before being promoted to the head office, she was a key member of the bank’s management, overseeing the retail business and also serving as chief financial officer.

Although Kamath faced many bank runs during his tenure, Kochhar’s tight grip on the institution led to a complete halt to this negative press.

There was only one bank run incident during his tenure.

When a 2015 RBI review found a large amount of underreported failed assets with the bank, it heralded a new strategy of focusing only on highly rated borrowers.

She also championed many social causes, but it was her awe-inspiring rise to the top that was most admired.

However, she left many baffled with her contrary views, how girls lack quantitative analytical skills, leading to a limited number of women in secondary schools.

Over the years, her leadership of the bank became a hyphenated relationship in which she came to define ICICI Bank, until her formal departure was announced six months after allegations of impropriety first surfaced, although she was on indefinite leave after the board. she was forced to launch an outside investigation into the entire issue.

The reasons for his expulsion concern a loan to Videocon and commercial flirtations between his promoter Venugopal Dhoot and his husband Deepak Kochhar. Dhoot had invested in and subsequently exited an energy company promoted by Deepak and Chanda Kochhar did not refuse or disclose this when a loan was granted by ICICI Bank to Videocon as part of a consortium.

Initially, she enjoyed the council’s full support, but lost support as the list of allegations grew, with more names such as an Essar dos Ruias shell company emerging among those with whom the Kochhar family had links.

However, the earnings from Ruia’s draws were just a fraction of Videocon’s loan of Rs 3,250 crore in FY 2011, which soon became a failure.

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

Ultimately, it was the as-yet-unnamed whistleblower’s denouncement that turned out to be his undoing.

After initially dismissing her in the face of Videocon’s allegations, the bank launched an independent investigation by retired judge BN Srikrishna and Kochhar went on indefinite leave pending the inquiry.

This led to Sandeep Bakhshi being appointed Director of Operations to oversee day-to-day operations.

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

Regulations allow heads of private sector banks to continue until age 70. His offer of resignation has been accepted with immediate effect.

In recent months, shareholders have sought clarification on the matter at annual meetings and have also raised concerns about the bank’s decision to name her as chairman of the group’s securities arm.

Kochhar, who maintained a high public profile, has been out of the public eye since his forced departure.

From a performance standpoint, when it took over ICICI Bank, it was the second largest in the system and the largest among its private sector peers.

But by the end of its career, it had slipped to a distant third in the industry and the second-largest private sector lender after HDFC Bank.