(Bloomberg) -- Chanda Kochhar, chief executive officer of ICICI Bank Ltd. will be going on leave as a panel appointed by the lender probes allegations against her.
The bank’s board, which met in Mumbai on Monday, has decided to accept her request for going on leave, according to exchange filings. Sandeep Bakhshi, CEO of ICICI Prudential Life Insurance Co., will be chief operating officer, according to the filing.
The Mumbai-based lender’s board decided last month to set up a panel to examine the anonymous complaint that alleges quid pro quo in the course of Kochhar’s work in dealing with certain borrowers of the bank. The complaint also alleges that the CEO violated regulatory provisions related to conflicts of interest over a period of time, according to the filing.
ICICI Bank has appointed B N Srikrishna, a retired judge from India’s top court, to investigate these allegations, people familiar with the matter told Bloomberg. This investigation comes as federal authorities separately conduct a so-called preliminary inquiry into an alleged nexus between a local conglomerate and Kochhar’s husband.
ICICI Bank’s American Depository Receipts jumped 3 percent, the most intraday since May 8, after the bank’s exchange filing. Shares of India’s second-largest private-sector bank dipped about 1 percent as of 9:40 a.m. in Mumbai on Tuesday after surging 3.7 percent the previous day amid reports that the board was considering asking Kochhar to go on leave.
“Markets are cheering the decision that investors have been waiting for since March,” said Kranthi Bathini, director of Mumbai-based financial advisory firm WealthMills Securities Pvt. “This puts to rest some of the questions that were raised regarding soundness of corporate governance practices at the lender.”
ICICI is the worst performer among private-sector lenders on a 10-member gauge since May 2009, when Kochhar took over as CEO. Its bad-loan ratio is one of the highest among its peers.
Bakhshi resigned as CEO of ICICI Prudential, which named N.S. Kannan as the managing director and CEO, according to a separate filing from the insurer.
Bakhshi’s 32 years of work at the bank under different verticals should aid smooth transition, Jefferies India Pvt. analysts led by Nilanjan Karfa wrote in a note. They recommend buying the stock with a target price of 380 rupees.
“For now, perhaps the board has found a safe middle ground,” Karfa said.
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