Low profits, high NPAs: Task cut out for Sandeep Bakhshi as ICICI Bank COO

Low profits, high NPAs: Task cut out for Sandeep Bakhshi as ICICI Bank COO

Mumbai, Jun 19: For Sandeep Bakhshi, the going will be tough in his new role as the chief operating officer (COO) of ICICI Bank.
Fall in profits, rising non-performing assets (NPA) or bad loans and ambitious targets for the upcoming years are some of the challenges Bakhshi will have to deal with on the business front.
In addition, he will have to move swiftly to control any damage that may have been caused to the bank’s image as well as investor confidence due to the ongoing controversy of alleged conflict of interest with respect to its managing director and chief executive Chanda Kochhar.
This controversy is the key reason for the numerous changes at the ICICI Bank management, including the appointment of Bakhshi as the COO.
Controversy trigger
While the bank’s succession plans are being debated, the outcome of the external inquiry set up by ICICI Bank as well as probes by numerous regulatory authorities into Kochhar looms as a dark cloud over the lender’s reputation.
Last week, rating agency Fitch Ratings, in its review, flagged of gaps in risk control at ICICI Bank.
“An ongoing investigation at ICICI on extending a loan with a potential conflict of interest has also focused the authorities’ attention on the bank’s governance. Adverse findings could create reputational risk, particularly if they point at broader weaknesses in the management,” said the report.
The country’s third largest bank, in terms of assets, is mired in controversy surrounding a whistle-blower’s revelations that there were alleged quid-pro-quo transactions between Videocon Industries, Chanda Kochhar and her husband Deepak Kochhar’s company NuPower Renewables.
Kochar has been accused of not disclosing her conflict of interest when she sat on the banks’ credit committee which extended a Rs32.5 billion loan to Videocon Industries. The controversy arises as Venugopal Dhoot, Videocon’s promoter and chairman and managing director, was also a director in Nupower Renewables, a company owned by Deepak Kochhar.
ICICI Bank’s board and chairman have denied any wrongdoing and have stated that the loan was disbursed in accordance with the bank’s credit standards and was part of a consortium involving over 20 banks. Last week, the bank informed its stakeholders that it will appoint an investigator to conduct an independent inquiry. ICICI Bank had maintained that Chanda Kochhar is on annual leave. Kochhar’s leave has stretched beyond the timeline of two to three weeks, specified earlier by the bank’s spokesperson. On Monday, the bank said that Chanda will remain on leave till the inquiry is over.
The allegations against ICICI Bank and its chief executive have resurfaced recently and investigations by the Securities and Exchange Board of India (Sebi), Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) are now underway.
The bank did not provide any timeframe for the Srikrishna Committee or any other details, which suggests that the process may be a long-drawn affair.
The bank’s March 2018 quarter (Q4) net profit stood at Rs10.2 billion, its lowest in the last eight quarters. The bank has seen a consistent drop in net profit over the quarters, as Q3FY18 profit stood at Rs16.5 billion, while the previous year’s Q4 and Q3 profits stood at Rs 20.2 billion and Rs24.4 billion, respectively.