Indian bank ICICI’s scandal-hit Chanda Kochhar quits as CEO, Sandeep Bakhshi gets top job

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MUMBAI/BENGALURU (Reuters) – ICICI Bank Ltd (ICBK.NS) chief Chanda Kochhar, who has been mired in controversy for months, resigned on Thursday (Oct. 4) after seeking an early retirement and will be replaced by Sandeep Bakhshi, the Indian private lender said.

Kochhar is the third high-profile woman banker in India to step down in recent months, following Arundhati Bhattacharya who retired from the State Bank of India (SBI.NS) a year ago and Shikha Sharma who is set to exit after almost ten years atop Axis Bank (AXBK.NS) in December.

Her exit also comes at a time when the banking regulator, the Reserve Bank of India (RBI), is driving a push for better governance and leadership changes at lenders that have racked up some $150 billion in bad loans.

“There is now additional pressure from RBI to show that banks are better governed,” said Shriram Subramanian, founder of proxy advisory firm InGovern.

ICICI has been in the grips of a controversy for months over allegations that Kochhar had favored Videocon (VEDI.NS), a consumer electronics and oil and gas exploration company, in the bank’s lending practices. Videocon’s founders had an investment in a renewable energy company founded by Kochhar’s husband.

Bakhshi, the former head of ICICI’s life insurance arm, took the helm of the bank on an interim basis in June, after Kochhar went on leave pending the completion of a probe into the alleged conflict of interest.

The bank said the “inquiry instituted by the board will remain unaffected” by Kochhar’s exit, adding that some of her benefits would be subject to the outcome of the probe.

The board had initially backed Kochhar, calling the nepotism allegations against her “malicious and unfounded”, but later instituted the probe into the matter in June.

ICICI shares rallied as much as 5.8 percent after Bakhshi was confirmed as CEO for a five-year term on Thursday.

“This removes the element of uncertainty and will be positive for the stock,” R. Sreesankar, co-head, institutional equities at Indian brokerage firm Prabhudas Lilladher, said.

Kochhar, 56, had headed ICICI, India’s third-largest lender by assets, since May 2009. She is also stepping down from the board of directors of the bank’s units, ICICI said.