Mrs Chanda Kochhar, former head of ICICI Bank and her husband were arrested on December 23, 2022. I have been tracking the development relating to Mrs. Kochhar and the “high value” loans she is alleged to have made to the Videocon group ever since the story was broken in 2018.
Not so much for the enormity of the scam, if it were established to be one. Niravbhai and Mehulbhai have proven that they can do far better, more than even a certain shipyard firm. When it comes to plundering at scale some of our industrialists seem to be breaking new ground ever so often. More frequently than even unico(r)ns get minted!
My interest in the unfolding events
The developments were of particular interest to me because Mrs Kochhar’s career in ICICI started in an office that she shared with me and another colleague in the earlier form of the ICICI Bank, known as the Industrial Credit and Investment Corporation of India (ICICI).
It was in 1984 if I recall right. She had just completed her MBA from the Jamnalal Bajaj Institute of Management Studies, literally next door to the Backbay office of ICICI, just north of Nariman Point, with a gold medal for being the topper of the batch. She was also a qualified cost accountant by then, on top of being an economics graduate.
Very soon we all realized that Mrs Kochhar was destined to be a star amongst all of us young credit professionals who joined ICICI bank then as “Junior Officers”. She was the picture of quiet efficiency who could for example, count in a jiffy pages and pages of numbers, two digits at a time.
What added an element of magic to her early career was the daily evening visit of a young, man, handsome enough to be in the movies or modelling. Some of us who knew Mrs Kochhar (nee Advani back then) got introduced to him as Deepak Kochhar. Chanda Advani and Deepak Kochhar had decided to get married by then.
Over the years since then we all watched her career race ahead, not without the tinge of understandable envy. Apart from her sheer brilliance as a finance professional, she seemed to navigate well the institutional rapids of ICICI, one of the three most significant financial institutions at that time, presumably with a little help from a few in the leadership in ICICI who seemed to have spotted the potential in her to lead the corporation one day.
She was soon part of that brilliant constellation of highly successful female executives that the ICICI of Mr N Vaghul helped break the glass ceiling – Lalita Gupte, Shikha Sharma, Kalpana Morparia, Vedika Bhandarkar, Renuka Ramnath, Madhabi Puri Buch, Vishakha Mulye…And possibly many more that my fading memory cannot recall.2 Each of them eventually went on to make a name for herself outside of ICICI.
None of us however seemed to have noticed anything about the young and rising star that Mrs Kochhar was, to suggest this unfortunate denouement one day. She was a perfect picture of work-life balance, making time for her family and her religious pursuits in the midst of running a business. In spite of the fact that personally I had reason to feel angry about having been wronged in one or more instances I had always envied the talent that drove her success.
The Role of Corporate Governance
As I tracked the progress in this case over the past five years the inescapable question that kept crossing my mind was if the alleged improper loans were the result of a leader gone astray? Or that of a corporate governance system that did not seem to be doing its job? Or was it above all symptomatic of a larger malaise in our society that seemed to place pecuniary gain above all else?
Legal processes will take their course as they try to uncover the truth and the role that Mrs Kochhar played in this sorry episode. The media will meanwhile feed the frenzy of a society that seems to wait for its daily dose of scandal, like the people of Rome baying for justice against Brutus.
But I believe a few observations about the state of governance and business leadership would not be out of place, even as we await the legal verdict that I may possibly not get to see during my lifetime.
Banks are known to have over the years improved their processes of lending, inter alia, to pre-empt decision makers from using their authority to dish out favours and / or otherwise to line their own pockets – even if it was most of the time a case of locking the stables after the horses had fled.
The accounts in the press suggest that ICICI Bank had similar internal supervisory mechanisms in place. The question therefore that one might want to ask is not so much how did one individual manage to get the committee to vote as she wanted it to. But how did the system allow such decisions to be made?
Our governance systems seem to throw up far too many such instances of malfeasance. They seem to keep popping up with almost unfailing regularity. They cannot all be pinned on to the avarice of one individual.
The institution called independent directors needs to be reviewed. And made more accountable. I will not be surprised if far too many independent directors really do not function in an environment that does not allow them to be truly independent.
The institutionalization of greed
The second larger factor is perhaps the emphasis our society seems to place on money as a measure of success. Professor Prasanna Chandra, a professor of mine at IIMB, a successful investor and author of many popular books on investment and finance, once made an interesting remark: For a society that teaches us to treat wealth as an evanescent possession and instead exhorts us to pursue everlasting non-materialistic spiritual goals, the extent of prestige we attribute to money in our social and public life is remarkable and intriguing.
How else does one explain the numerous such instances of financial misdemeanour that we witness or get to hear of?
We are proud of the number of Indians who make it to the global list of super-rich, even as a few Indians still do not have money to cremate their dead. A leading national financial daily has almost a page, a few days every week, devoted to inform us of the daily habits of the wealthy. The publisher of an online startup focused journal once lamented in a talk to students at my school about how entrepreneurship seemed to be all about raising Series A and becoming a unicorn.
It is not as if there are not interesting things going on around us in the world of business. There are selfless people who solve important problems without hoping to become unicorns or make dubious public offerings of stocks. There is a startup that solves Bangalore’s garbage woes, makes useful consumer products and energy out of it while making life a tad better for those who help collect it. There is this other startup that has made ophthalmic screening and treatment of ophthalmic disorders affordable at scale, inspired by the pioneering work of Aravind Nethralaya. And many many more of them, hundreds if not thousands of them, that strive to create social impact at scale.
They do not make it to the front page of our financial dailies. And are quite possibly happy not to. We do not celebrate them. If they are invited to panel discussions on entrepreneurship it is as a grudging concession to inclusiveness and sustainability.
This massive premium we seem to place on the accumulation of personal wealth does seem to drive many among the youth of the nation. It is possibly the result of a society that is breaking out of centuries of financial deprivation. And may be this too shall pass. Hopefully.
1 G.Sabarinathan, PhD teaches at IIMB. On the rare occasion he writes, he claims to be inspired by Khushwant Singh’s idea of malice towards one and all. Views and reflections in this article are personal.
2 I was fortunate to know many of them personally. For example, I started my career by sharing an office with Shikha Sharma.
Perhaps, the checks and balances , say the ‘system’ in the bank did not provide for checking against ‘greed’ factor in an individual; and concentration of power and leading up to corruption.
May be she succumbed to peer pressures or husband-pressure or some other pressure. The system should have empowered to be able to withstand such pressures and not yield. When her husband was involved with the Videocon group (through NuPower etc .) the system should have forced her to recuse herself from the Loan-approval committees. We can say it was a systemic failure which resulted in this (alleged) fraud happening. If this had not happened, perhaps she would have continued to lead the bank to greater heights and may be we would have seen the bank among the top few banks in the world.
Sabari couple of interesting thoughts there on corporate governance, independent Board etc