RESPONSIBLE BUSINESS ASSIGNMENT

1. According to the ex-chairman of ICICI, Kochhar was only one of the

members on the ICICI credit committee that approved the questionable
loans. In light of this statement, explain whether or not Kochhar’s not
guilty stand is justified.

Ans. As part of the Board of Directors that manages the approval of large
loans, she is responsible for any mishap that happens due to such loans,
according to me, it is not justified at all, in this case about 86.7 percent of the
loan sum was still unpaid by 2017. She can't use her power to encourage the
acceptance of large loans and she is equally liable in the event of any
discrepancies.

2. What reasons could the ICICI board of directors cite for its initial lack of
response regarding fulfilling its governance role? How would you
describe the ICICI board of directors?

Ans. The key reasons I would list for the absence of management on the part
of the board of directors are:
 Not only was she the CEO, but she also led the credit committee.
Chanda Kochhar was very powerful.
 She was very respected by the board because during crises such as
the Lehmann Brothers crisis in 2009, which won her the reputation and
confidence of the directors, she managed the business very well.
Now coming to the board,first and foremost, the board has been pretty much lenient
with Kochhar, For example
 Kochhar suggested a generous special option for her own in October 2015, at
a time when the company was not doing so well, the board willingly agreed to
it without any hesitation to demonstrate that the board was not so considerate
about the current performance of the company and should have made price
cuts rather than giving their CEO a generous special option.
 She also settled with the board for reimbursement for her extended absence,
whether or not she was guilty of the charges or not, levied on her during the
ongoing investigation.

3. Explain whether or not Chaturvedi was justified in terminating Kochhar

and in recalling all of her bonuses and stock options, despite her
successful term as CEO of ICICI.

Ans. Yes, according to me, during her tenure as CEO, Chaturvedi was right
in terminating and revoking all Chanda Kochhar's bonuses and stock options,
because when people like her who sit in high positions abuse their power,
they must be reprimanded for their mistakes. This is just the tip of the iceberg,
as Gupta said, and this trend of penalizing loans that are not merit-based is
 nothing new in the banking sector. When such individuals who are such large
figures of authority are punished for their wrongdoings, it sets a precedent to
consider before behaving for similar authority figures. As a CEO, she was
very successful; she was a female financial pioneer, but what she has done in
recent years is controversial and immoral

4. Explain what options Chaturvedi has to prevent similar fraud situations

in the future.

 More rigorous corporate governance guidelines.

 The board of directors should be made more responsible.
 Proper background checks of firms and board of directors prior to any
loan penalty.
 More autonomy for stakeholders to express their view of the business.
 More accountability
 Monitoring the use of funds for the following businesses approved by the
banks

5. Should Chaturvedi follow the advice from experts to set the right tone at
the top and effectively manage risk culture? If so, how can he do this?

Ans. I think he should go for the experts' advice because they are somehow
right about the current scenario. It is important for the banking business to
manage the risk culture, and the bank should take calculated risks so that
successful management is possible.
He can do the following things to improve the current situation
 Proper background inspections of the company and its board of directors.
 Review of the historical results of the firm.
 Ascertaining the company's future priorities and commitments.
 Monitoring the end-use of funds to the following businesses approved by
the banks.
 The Board of Directors should be made more responsible and penalized
for failure to meet any fiduciary duties.

K Meenakshi
Roll no 074