Chanda Kochhar asked to go on leave by ICICI Bank after new charges fly
After a huge controversy erupted involving Managing Director and Chief Executive Officer of ICICI Bank and her role in providing loans to the Videocon group in which conflict of interest has been alleged, it has been revealed now that the lender has asked its own chief to go on indefinite leave, LiveMint reported. The accusations against her include the links that Vidoecon group chairman Venugopal Dhoot has with Chanda Kochhar's husband Deepak. However, after initial investigation in 2016, she was cleared of all charges.
Reacting to the news, ICICI Bank share price surged 5 per cent to Rs 299.80 on the BSE, and was the top gainer on Sensex and Nifty. The stock contributed most to Nifty Bank as well.
The immediate reason behind this drastic step was the emergence of a new whistleblower complaint. In a meeting between 7 independent directors on the ICICI Bank board, it was decided that Kochhar would be asked to go on leave as the charges were very serious and could not be addressed through any internal probe, LiveMint reported.
The members cited the fact that the previous such probe had yielded no result and therefore it was best for that not to be repeated as stakeholders have been engulfed by doubt. Notably, the recommendation made was for an independent probe to be conducted. Also, significantly, ICICI Bank has appointed a new board member and replaced 2 others.
The bank has not really started looking for a replacement for Kochhar. In case there is any inkling of wrongdoing and things move towards replacing her, the bank is likely to appoint an agency.
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Meanwhile, ICICI Bank reported 45 per cent decline in consolidated net profit to Rs 1,142 crore for the fourth quarter ended March 31, 2017-18. The private sector lender logged a net profit of Rs 2,083 crore in the January-March quarter of the preceding fiscal, 2016-17.
The banks standalone profit declined by 50 per cent to Rs 1,020 crore as against Rs 2,025 crore in the year-ago quarter.
"ICICI Bank's liquidity profile has improved meaningfully. If the bank continues to provide on bad loans, we should be able to see ROE normalisation in F2020. At 1.1xF2020e core book and 7xF2020e core EPS, the stock is attractive. It will be volatile as earnings progression will be choppy,and there will be management-related news flow, but stock should do well over the next 12 months," said Morgan Stanley.