It is matter of grave concern that neither ICICI Board didn't take strong actions against Chanda Kochhar until Srikrishna Panel found her violating lenders code of conduct nor did Reserve Bank take cognizance of the matter. Although from day one there were enough prima-facie evidences suggesting that everything was not as per the norms in ICICI dealings with Videocon. The charges of nepotism, conflict of interest, violation in the lender’s code of conduct and other irregularities were evident and loud from day one.
Since Chanda Kochhar’s husband was directly involved with the borrowing firm Videocon, anyone can assume that the possibility of some undue favours cannot be written-off. Though for ICICI it was not a cause of concern at all. Rather they gave her clean chit in this matter on first instance. However such a hasty decision by board was not expected but board was busy in the process of damage control to its brand image. While doing so board forgot it was its responsibility to ensure that bank followed all the codes and regulations. From day one it was clear that ICICI had failed on issue of banking governance. Even Reserve Bank did not find this matter that important. And in this way ICICI Board and RBI allowed bank to fail.
It’s high time for RBI to act so that it can ensure the independence of independent directors and fix specific and measurable responsibilities of independent directors of banks with punitive measures in implementing corporate governance in banks. Also there is need to put a mechanism in place that could take cognizance of such matters as Indian banking sector is already plagued with bad governance and it is not expected that these would be over sooner.