Chanda Kochhar, former Managing Director and Chief Executive Officer of ICICI Bank, may have to pay the private lender around Rs 350 crore. The bank will also retrieve all bonuses paid to her between April 2009 and March 2018, said media reports.
On Wednesday, the Justice BN Srikrishna panel submitted its report to the bank's board which indicted Kochhar and said the former MD was "in violation of the ICICI Bank Code of Conduct, its framework for dealing with conflict of interest and fiduciary duties, and in terms of applicable Indian laws, rules and regulations."
The panel concluded that Kochhar's lack of diligence with respect to annual disclosures as required by the bank in terms of its internal policies implies that the lender’s processes were rendered ineffective by her approach to such disclosures and avoidance of conflict.
Post-the report, ICICI Bank has said that it will treat Kochhar's resignation as 'Termination for Cause' and will stop payment of unpaid benefits including unpaid bonus or increments, unvested and vested and unexercised stock options, and medical benefits.
Kochhar owes the bank around Rs 350 crores, according to a report in The Economic Times. According to the bank’s annual reports, 94 lakh shares were issued to Kochhar between FY09 and FY18, the period for which the bank has sought a claw-back of all dues and stock options. However, how many of those options Kochhar had exercised and vested, and how many are yet to vest is not known, the report said.
Kochhar is believed to have exercised 36.8 lakh shares of her ESOPs worth nearly Rs 134 crore in May 2015, according to a report in the The Indian Express, thus bringing down the repayment amount to Rs 221 crore. Kochhar earned close to Rs 9.82 crore as performance bonus between April 2009 and March 2018 as the CEO of the bank, which she may have to return, the report said.
Kochhar, the first woman CEO of a bank in the country, will have to give back bonuses worth over Rs 9.82 crore, accumulated in the course of 10 years since 2009, to ICICI Bank.
"I am utterly disappointed, hurt and shocked by the decision," Kochhar, who was on leave from June and finally resigned early October, said in a statement on Wednesday evening.
She was quick to add that none of the credit decisions at the bank are unilateral and the bank has established processes and systems which involve a committee-based collective decision-making.
"The organisational design and the structure obviate the possibility of conflict of interest," she claimed.
The remarks come days after the CBI named Kochhar, her husband Deepak along with VN Dhoot of Videocon Group and the then entire the entire credit committee members of ICICI Bank who are today heading other large financial institutions, in the FIR.
The case relates to a Rs 3,250-crore the bank had extended in 2011 to the Videocon group and the ensuing benefits his husband gained in business from the Dhoots. The loan became dud and the entire group has gone belly up.
Kochhar said she had served the ICICI group for 34 years "with all my dedication and hard work" and the decision from the bank today has caused her "immense hurt and pain".
"I have pursued my career as an independent professional with utmost honesty, dignity and integrity. I continue to have faith and belief in my conduct as a professional and I am certain that truth will ultimately prevail," she said.
The Srikrishna panel observed that Kochhar violated bank policies and other rules and regulations. Based on the findings of the panel, the ICICI Bank board on Wednesday advised to take "further actions as may be warranted in the matter".
Meanwhile, present chief executive Sandeep Bakhshi said in an analyst call after the earnings announcement that the bank has put out a statement about Kochhar, and their role now is limited to cooperating with regulatory agencies.
The board of ICICI Bank had repeatedly given a clean chit to Kochhar in the past and refuted issues of conflict of interest. On 28 March 2018, the bank had said, “The board has come to the conclusion that there is no question of any quid pro quo/nepotism/ conflict of interest as is being alleged in various rumours. The board has full confidence and reposes full faith in the Bank’s MD &a CEO, Ms. Chanda Kochhar.”
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Updated Date: Jan 31, 2019 11:17:30 IST