The dias at the ICICI Bank AGM held in Vadodara, Gujarat, on September 12, 2018. (Photographer: Vishwanath Nair/BloombergQuint)

ICICI Bank AGM: Shareholders Question Governance, Seek Clarity On Chanda Kochhar Probe

ICICI Bank Ltd. held its 24th annual general meeting in Vadodara on Wednesday. Missing from the podium was Chanda Kochhar, who remains on extended leave but holds on to her post as chief executive officer at the bank. She may have stayed away but the allegations of impropriety against her clouded the mood at the AGM.

Corruption at the bank is not acceptable, shouted out one of the shareholders in the course of the AGM. A few others clapped. The AGM was by no means unruly but a number of shareholders did choose to raise questions around Chanda Kochhar, governance at the bank, and whether the management needs to take tough decisions. In response, Sandeep Bakshi, the chief operating officer and acting CEO, assured that the bank had been ring-fenced from the controversy.

Sunil Hemnani, one of the shareholders present at the AGM, questioned why shareholders had not been given any clarity on the probe against Chanda Kochhar. “We deserve a response. This is a big mess-up for the bank,” he said while speaking at the AGM.

“How did you give a clean chit in 15 minutes and now it is taking so long for an investigation? On what basis did you give support to the CEO,” Hemnani asked.

Such questions have continued since March when allegations re-emerged about impropriety in loan approvals to the Videocon Group. The board first backed Kochhar completely and then later decided to initiate an inquiry headed by Justice BN Srikrishna. The report of that probe is still awaited. Chanda Kochhar went on indefinite leave in June.

Vimal Bhatt, another shareholder, sought a relook at the governance structure at ICICI Bank. A situation of “lack of faith” has been created, he said. Bhatt also questioned the absence of the government nominee on the ICICI Bank board from board meetings of the bank.

Incidentally, Lok Ranjan, the government representative was not present at the AGM either. Neither was MD Mallya, a recently appointed board member.

Not all shareholders were as worried. Arakchand Shah told the AGM that he was sure the bank would “be able to weather the storm.” He did, though, ask the management to take tough decisions and make large provisions. “Please put the house in order and cleanup the balance sheet,” said Shah.

ICICI Bank’s decision to vote in favor of reappointing Kochhar on the board of ICICI Securities was also brought up by a few shareholders. Going into the ICICI Securities AGM, some had questioned what the right approach for the bank would be. Should it abstain from voting in Kochhar’s favor until the probe is completed? Should it maintain status quo? The bank eventually voted in favor of Kochhar. Some shareholders chose to question why.

“We are disappointed with the board's decision to appoint Kochhar on the ICICI Securities board,” said shareholder RP Surana.

No AGM is without its share of humor. This one was no exception.

“The current crisis at ICICI Bank is a passing phase,” said shareholder Jayesh Manek. But he was quick to explain what he thought was the reason behind the troubles. “This is nothing but ‘shani dasha’....regular shani pooja will help in solving this,” said Manek invoking a widely-held belief in Indian astrology that the placement of the planet Saturn (Shani) can impact your fortunes.

The Management’s Defence

The management, in response to some of these queries from shareholders, stuck to script.

Bakshi, who is acting as the interim CEO in the absence of Kochhar, said that the bank is cooperating with all authorities.

We have insulated the bank’s functioning from this incident....We are committed to improving the bank’s functioning within the parameters of highest corporate governance.
Sandeep Bakshi, COO, ICICI Bank

Explaining the bank’s decision to vote in favor of Kochhar at the ICICI Securities AGM, Bakshi said that it would not have been appropriate for the bank board to take any decision before the investigation is completed. “Our MD and CEO is not attending office. We would wait for the investigation to be completed before we can take any action.” That comment came in response to a shareholder question on whether reputational risk could have been avoided if Kochhar had not been reappointed as director on the board of ICICI Securities.

To be sure, AGMs are not always an accurate reflection of the broader shareholder view about a company. That, perhaps, reflects best in the stock price. For ICICI Bank, the stock has outperformed the NSE Nifty Bank since the begining of April, when the controversy spiraled. However, a bulk of the out-performance has come since Kochhar went on leave and Bakshi was appointed COO.

ICICI Bank AGM: Shareholders Question Governance, Seek Clarity On Chanda Kochhar Probe