New Delhi - In a sudden development, Chanda Kochhar, who was mired in allegations of quid pro quo and conflict of interest, on Thursday resigned as managing director and CEO of ICICI Bank.
Kochhar, 57, whose second five-year term was to end in March next year, has been replaced by Sandeep Bakhshi, the former head of ICICI's life insurance arm, ICICI Bank said in a statement.
She had in June gone on leave after ICICI Bank appointed a retired Supreme Court judge B N Srikrishna to investigate an anonymous complaint that alleged quid pro quo in the course of her work in dealing with certain borrowers of the bank.
The complaint alleged that Kochhar had favoured Videocon in lending money because the firm's founders had an investment in a renewable energy company founded by Kochhar's husband.
Bakhshi, who took the helm of the bank on an interim basis in June, was named Managing Director and Chief Executive Officer for a period of five years until October 3, 2023, subject to various approvals. Bakhshi, a Mechanical Engineer from Punjab Engineering College, Chandigarh, started his career with ICICI in 1986.
He looked after the corporate clients for the Northern and Eastern regions of ICICI Limited before joining ICICI Lombard in 2002. His work responsibilities included business development, project appraisals, project monitoring and business restructuring.
ICICI Bank said the "inquiry instituted by the board will remain unaffected" by Kochhar's exit, adding that some of her retirement 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.
Kochhar, who had headed the country's third-largest lender since May 2009, will also step down from the boards of all ICICI subsidiaries including ICICI Securities where she had just weeks ago sought reappointment as chairperson.
The bank further said that the external enquiry instituted by the board against Kochhar in May will continue and the benefits to her would be subject to the outcome of the probe.
"The enquiry instituted by the Board (against Kochhar) will remain unaffected by this and certain benefits will be subject to the outcome of the enquiry. Kochhar will also relinquish office from the Board of Directors of the Bank's subsidiaries," the statement said.
"The Board of Directors of ICICI Bank accepted the request of Chanda Kochhar to seek early retirement from the Bank at the earliest," it said.
Kochhar's current five-year tenure as CEO was to end on March 31, 2019.
Meanwhile, independent director M D Mallya too resigned from the board for health reasons.
Shares of ICICI Bank closed at Rs 315.55, up 3.94 per cent on the BSE even as the benchmark index Sensex plunged by more than 2 per cent.
There are allegations of involvement of Kochhar and her family members in a loan provided to Videocon group on a quid pro quo basis.
It was alleged that Videocon Group pumped money into NuPower Renewables, a firm owned by Deepak Kochhar, husband of Chanda Kochhar.
There are also allegations that NuPower got investments of Rs 325 crore from Mauritius-based Firstland Holdings, a company owned by Nishant Kanodia, son-in-law of Essar Group co-founder Ravi Ruia.
The investments from Ruia's son-in-law's firm into NuPower started in December 2010. Incidentally, the same month ICICI Bank was the lead banker in a consortium of Indian banks that extended a USD 530 million loan to Essar Steel Minnesota LLC on December 29, 2010. This loan was later classified as NPA.
The Reserve Bank in its 2016 investigation in the matter had raised questions over the ownership of the Mauritius-based entity, First Land Holding, which had invested Rs 325 crore in NuPower.