Secret Board Rom Politics & nepotism paves unceremonious exit of Chanda Kochhar

Venkatesh Varadachar*

Last month, the board of directors of ICICI Bank decided to claw back the bonuses paid to Chanda Kochhar from April 2009 till March 2018.

As enthusiasts of all things related to money, what can we learn from this episode? Before we analyse this issue, here is a bit of background for those of you not following the corporate governance challenges of ICICI Bank. Chanda Kochhar was the CEO of ICICI Bank from 2009 till 2018, when she stepped down amidst allegations of nepotism.

She was a part of the credit committee that approved a ₹ 3,250 crore loan to Videocon group. There were business dealings between Chanda’s husband and Venugopal Dhoot, the chairman of Videocon group. The credit committee was not chaired by Chanda and there were also other senior executives as part of the committee. So, what exactly was Chanda’s fault as the then CEO of ICICI Bank?

To answer this, we need to realise that “Caesar’s wife must be above suspicion”.

People in high positions of authority should not even have any kind of suspicion or insinuation made against them. Chanda could have updated the ICICI board against her ”conflict of interest” and excused herself from the credit committee that approved the loan. A reputed law firm gave a clean chit to Chanda but then went back on their stance when fresh rounds of allegation against her surfaced.


In this season of corporate frauds, we have two big stories — IL&FS and ICICI Bank. While they are qualitatively different, both point to lack of oversight by the respective boards of these companies. As investors, it is important not to be swayed by the public relations exercises of charismatic CEOs. Also, the presence of well known figures as independent directors in the boards of corporates does not mean much if they don’t perform their responsibilities.

With the unprecedented bonus claw back inflicted on Chanda Kochhar, things will never be same again in corporate India. “C” level executives and the boards would be way more careful now. That said, we, as investors, cannot expect the system to self correct by default. We can raise the issues in company AGMs, conference calls and a myriad other forums.

The writer is an alumnus of IIM Bangalore and co-founder, Money Wizards.

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