Chanda Kochhar's good and bad times at ICICI Bank as its MD & CEO

Banker probably faces the toughest challenge of her career over Videocon loan controversy

Chanda Kochhar may have become the head of ICICI Bank, the country’s largest private sector lender in terms of consolidated assets, but she aspired to be an IAS officer. Born in Jaipur, Kochhar found her way into banking after a degree in economics at Jai Hind College, and then an MBA at Jamnalal Bajaj Institute of Management Studies, Mumbai, where she met KV Kamath during campus interviews. Kochhar joined ICICI in 1984 and worked her way up to become managing director and chief executive officer. 

In 2008, when Lehman Brothers filed for bankruptcy, ICICI Bank found itself at a turning point. Its exposure was minimal but the bank, like some other banks at that time, was also dependent on wholesale deposits, especially because it was consciously paring back on unsecured retail loans. Lehman’s implosion put pressure on its ability to raise funds. The economy was also under pressure as an indirect consequence of Lehman’s fall. Corporate India, a large customer base for the bank, was also facing heat.  From Rs 857 billion in March 2008, ICICI Bank’s market cap had fallen to Rs 370 billion a year later, and its bad debts were piling up. Kochhar, then chief financial officer and joint managing director, took over the reins in 2009, beating at least three top-ranked bankers. Her elevation was a consequence of K V Kamath retiring from the post.

A decisive leader, her style included a punishing work schedule that included taking day trips to New York City and making it back in time for Board meetings. She also quickly became the face of the bank, addressing investors, the media, et al. She lost no time in switching to recovery mode, slashing operational costs, and avoiding overseas acquisitions even when they were going cheap. The focus was staying solvent, getting out of unsecured loans and making the bank stronger.

She drove ICICI Bank’s next phase of growth with a number of actions, which included the estimated Rs 30 billion integration with Bank of Rajasthan and almost doubling the number of branches from 1,400 to 2,500 across 600 cities between 2009 and 2011. By the end of 2014, the bank's gross non-performing asset (NPA) ratio had come down from 5 per cent to 3 per cent. 

Her few indulgences self-admittedly were shopping for sarees and jewellery, both of which became her trademark dress-code, and watching the latest Hindi movies. She made it a point to take out time from her schedule for a media event to engage in a fireside chat with actress Deepika Padukone earlier this year. When Padukone asked what she might do if she was to work in films, the answer was “probably handle the schedules and the catering for the cast”.

In 2013, ICICI Bank under Kochhar took on the digital world by launching an app that allowed customers to track accounts, and even transfer money from Facebook. Technology is one aspect the bank has been clearly ahead in, vis-à-vis most of its peers. Also, Kochhar was asked to head a committee under the Ministry of Power, set up to recommend solutions to coal and gas supply issues. The following year, ICICI Bank became the first private bank to cross Rs 100 billion in market cap. One senior banker who knows Kochhar well says she is one of the few bankers “who understands retail and project finance in depth”.

Also, the bank brought in over 18 million unbanked people into the system. Along the way, under her leadership, Kochhar managed to dodge a bullet. ICICI was the only bank to extricate itself from Kingfisher’s loans by selling related loans of Rs 4.3 billion to SREI with a minimal haircut.

However, by 2014, the tide was starting to turn. ICICI Bank found itself bogged down with the baggage of bad loans, something Kochhar could not contain. If the number of branches had grown by about three times to 4,860, then the bad debt had also ballooned to Rs 460 billion by the end of 2017.

In just a few quarters, not only did the bad loans decimate the bank’s profit, but also started eating away at its corporate business. A Rs 36 billion provision nearly wiped out the bank’s profit for 2016. A year later, its gross NPA ratio bloated to nearly 8 per cent, and was still at those levels at the end of December 2017. This is the highest among private banks. Net interest margin, a key metric for a bank’s profitability, however, has increased from 2.25 per cent in 2009 to 3.5 per cent for the quarter ended December 2017.  In the last 12-15 months though, the positive moves that shareholders would agree on are that Kochhar has taken steps to unlock value in the bank by listing its life insurance, general insurance and securities businesses. The combined value of these three companies is Rs 1.06 trillion. Part of the gains from the sale of the bank’s holding in these companies, however, has been used to write off bad loans. Recent weeks have put Kochhar in the spotlight for all the wrong reasons as the allegations of nepotism suggest she was involved in extending loans to Videocon, which in turn funded her husband Deepak Kochhar’s firm. 

Chanda Kochhar did not respond to messages seeking comment.

MK Sharma, the bank’s chairman, was also not available.

Even as the bank’s Board backs her, and the investigations extend to her husband and his brother, this is one battle that has the banker’s back against the wall. Some industry experts say the news of veteran banker and former ICICI colleague Shikha Sharma of Axis Bank stepping down in December this year, as opposed to mid-2021, has increased pressure on Kochhar. It remains to be seen how she responds to the situation.