Chanda Kochar: The Rise and Fall of a Banking Giant

Chanda Kochhar, who was arrested for cash-for-loan fraud on Friday, was once a powerful banker and instrumental in making ICICI Bank the largest private sector lender in the country.

Kochhar, a regular feature on Forbes lists of best global companies, was arrested by the Central Bureau of Investigation (CBI) along with her husband Deepak Kochhar in connection with alleged fraud and irregularities in loans sanctioned by ICICI Bank to Videocon Group companies. Kucharis was summoned to the agency’s headquarters and arrested after a brief interrogation session.

Her chapter at ICICI Bank came to an abrupt end in 2018 when the board approved a request for Kochhar to seek early retirement following allegations of corruption and quid pro quo while making loans to the now bankrupt Videocon Industries.

Kuchar, who has risen to occupy a corner office at the largest private lender, has been mired in allegations of conflicts of interest, lack of disclosures and quid pro quo while making loans to Videocon. In fact, she was the first woman to head a major moneylender in the country.

A favorite of then group boss KV Kamath, Kochhar joined ICICI, the infrastructure lender in his former avatar, as a management trainee in 1984.

It rose to play a significant role in its transformation into a retail-focused lender when it turned into a commercial bank in the early 1990s.

In 2009, she was chosen to succeed larger-than-life Kamath as Managing Director and CEO despite a strong leadership seat.

Her promotion also led to the exit of Shikha Sharma (ex-Chairman of Axis Bank), who was high up the group standings.

Prior to her promotion to the corner office, she was a key member of the bank’s management, overseeing the retail business and was also the chief financial officer.

While Kamath faced several bank runs during his tenure, Kochhar’s firm control of the establishment brought such negative press to a standstill.

There was only one incident involving the bank’s management during her tenure.

When an RBI review in 2015 found a significant amount of underreported assets with the bank, it announced a new strategy to focus only on well-rated borrowers.

She has also championed many social causes, but her inspiring rise to the top is most admired.

However, she baffled many with her contradictory views such as the girls’ lack of quantitative analytical skills, which resulted in a limited number of women in secondary school.

Over the years, her leadership of the bank became an on-and-off affair, as she came to introduce ICICI Bank, until announcing her official exit six months after allegations of wrongdoing surfaced, though she was on indefinite leave after the board launched an external investigation into the whole affair.

The reasons for her dismissal relate to a loan to Videocon and business dalliances between her promoter Venugopal Dhoot and her husband Deepak Kochhar. Dhoot invested in and later exited an energy company promoted by Deepak and Chanda Kochhar did not step aside or disclose when ICICI Bank granted a loan to Videocon as part of a consortium.

Initially, it enjoyed the full support of the board of directors but lost support as the list of allegations continued to grow, with more names such as the shell of Ruias’ Esar Group emerging among those the Kochar family had links with.

However, the gains from Ruia’s connections were just a fraction of Videocon’s Rs 3,250 crore loan in FY 2011, which quickly turned out to be a failure.

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

Finally, it was a complaint by a whistleblower, who had yet to be named, which proved to be the reason for her retraction.

After initially being acquitted in the face of the Videocon allegations, the bank launched an independent investigation by retired judge BN Srikrishna and Kochhar went on indefinite leave pending the investigation.

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

Kochar had six months before her current term ends in March 2019.

The regulations allow heads of private sector banks to continue until the age of 70. Her offer to resign was accepted with immediate effect.

In the past few months, shareholders have sought to clarify the issue at annual meetings and have also raised concerns about the bank’s move to appoint her as head of the group’s securities division.

Kuchar, who has maintained a huge profile, has been out of the public spotlight since being forced to leave.

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

But at the end of its career, it fell to a distant third place in the sector and the second largest private sector lender after HDFC Bank.