April 23: The Union Finance Ministry is likely to intervene as stakeholder to increase the pressure over the board members of ICICI Bank. The move follows the apparent reposed stance of the board over the recent affairs of the private sector bank, including allegations of conflict of interest against CEO Chanda Kochhar.
The decision comes after the replacement of government nominee Amit Agarwal from the board of ICICI Bank. Amit Agarwal, who stayed off the board meeting on March 28, was replaced by Lok Ranjan, joint secretary in the DFS.
The key meeting that was held on March 28th witnessed the board giving the clean chit to Chanda Kochhar despite the bank admitting earlier that the CEO did not recuse herself in relation to grant of loan worth Rs 3520 crore to Videocon. Nepotism allegations were raised citing the business partnership between Videocon promoter Venugopal Dhoot and Deepak Kochhar, husband of Chanda Kochhar.
A preliminary enquiry case was registered a few days after the bank backed Kochhar’s decision in the board meet. According to reports, a section of the bank board is keen to replace Kochhar with an interim CEO during the investigation.
The decision is however likely to be taken by the board and RBI, as government is planning to leave the investigation and supervision to the regulators. However, the government will be pressing for a response from the bank as to why the CEO did not recuse herself, considering the broader investor and depositor issues involved.
The government will also reportedly take position as stakeholders on the board with LIC to protect their investments, which has come under threat after the bank stocks were put to slider. A demand for an external audit into the allegations is also likely to be put forward, though the bank had rejected a similar demand in the earlier meeting. ICICI Bank had informed that its board would meet again on May 7 to disclose the Q4 results and dividends.