Mumbai: Global ratings agency Standard & Poor's has said the Chanda Kochhar case, which saw the bank board changing its views, is illustrative of the weak governance at the domestic banks.
"The recent developments surrounding former ICICI Bank chief executive Chanda Kochhar and the changing view of the bank's board affirms our view of the generally weak governance and transparency in the country's banking sector," it said in a note Friday.
Kochhar was an iconic banker who rose to the top at ICICI Bank, becoming the first woman chief executive of a bank in the country.
The agency pointed out that the ICICI Bank board had fully backed Kochhar once in 2016 and twice in 2018 (in March and June) when allegations about her wrongful conduct had come up and added that the Kochhar case can lead to a relook by boards across the corporate world in the country.
"The ICICI board's reversal of its previous strident support of Kochhar is significant in our view, and will likely result in boards across the sector being more careful in giving clean-chits to key management personnel facing allegations," it said.
On Wednesday, the bank said it would treat her resignation as a dismissal due to serious lapses in her conduct by an enquiry panel led by retired judge BN Srikrishna and would ask her pay back close to Rs 9.8 crore of bonues given to her between 2009 and 2018 and also block his Esops worth over Rs 340 crore as penal punishments.
Kochhar said she was "disappointed, hurt and shocked" by the bank's decision and underlined that all the credit calls were taken collectively. She is also reportedly planning to legally challenge the board decision.
However, the rating agency welcomed the move to claw-back bonuses, saying this is an important step by the board that "supports accountability and good stewardship of companies."
The CBI filed a case against Kochhar last week and also said the role of other executives in the credit appraisal committee then, including her successor Sandeep Bakhshi, then CFO NS Rajan and the past chairman KV Kamath, among others, will be investigated.
The CBI filed an FIR naming Kochhar and her husband Deepak and others in the alleged quid pro quo in extending Rs 3,250-crore loan to the now crippled Videocon Group in 2012 which by 2017 became dud loans.
Amid the raging controversy over the case, Kochhar, also a Padma Bhushan awardee--quit the bank last October 2018, after being on leave from last June.
The bank in May had appointed the Srikrishna panel which earlier this week observed that Kochhar violated bank policies and other rules and regulations.
It can be noted that governance at domestic lenders has always been a matter of concern for many years now, especially at the state-run lenders. However, recent developments at Yes Bank and Axis Bank, which have seen RBI- forced top leadership changes, have brought the private sector lenders' roles as well to the fore.