Prashant Bhushan Opposes Extension of ICICI Bank CEO Sandeep Bakhshi, Flags Systemic Governance Failures, Fraud Patterns, Labour Violations and Tax Irregularities
In a significant intervention concerning governance standards in India’s banking sector, senior Supreme Court advocate Prashant Bhushan has formally written to the Reserve Bank of India opposing the reappointment and extension of Sandeep Bakhshi as Managing Director and CEO of ICICI Bank.
The detailed representation raises serious concerns spanning regulatory violations, fraud patterns, labour law breaches, tax irregularities, and systemic governance failures, calling into question the suitability of the current leadership to continue in office.
Invocation of RBI’s Statutory Powers and Legal Framework
In his extensive representation, Bhushan has urged the RBI to exercise its powers under key provisions of the Banking Regulation Act, 1949—specifically Sections 35A, 35B, 36AA, and 10B. These provisions empower the regulator to intervene in cases where bank management is found inconsistent with public interest, depositor protection, or sound banking practices.
He has argued that permitting the continuation of Bakhshi’s tenure despite repeated lapses would amount to a failure of regulatory responsibility and would undermine the statutory mandate of the RBI.
Repeated RBI Penalties Indicating Deep Structural Failures
A central pillar of the complaint is the series of monetary penalties imposed by the RBI on ICICI Bank between 2019 and 2025. These penalties collectively run into crores and relate to serious operational and compliance failures.
The violations cited include:
Deficiencies in lending practices and credit discipline
Failures in fraud detection and reporting mechanisms
Cybersecurity lapses, exposing systemic technological vulnerabilities
Violations affecting customer protection norms
Bhushan has emphasized that these are not isolated or technical breaches. Instead, their frequency, recurrence, and nature point toward persistent systemic weaknesses, including ineffective internal controls and inadequate risk governance frameworks.
Pattern of Fraud and Risk Mismanagement
The representation also highlights multiple fraud cases reported in the public domain, arguing that the regulator need not wait for a full-blown financial crisis before acting.
Bhushan’s position is clear and legally significant:
A demonstrable pattern of irregularities itself is sufficient ground for regulatory intervention.
He contends that allowing the same leadership to continue despite repeated red flags creates a risk to financial stability, depositor confidence, and the broader banking ecosystem.
Serious Labour Law Violations and Employee Rights Concerns
One of the most serious and detailed sections of the complaint pertains to labour practices within ICICI Bank.
Bhushan has cited findings of the Union Labour Ministry, which reportedly observed that:
The bank failed to justify disciplinary actions taken against employees
It did not furnish required records despite repeated directions from authorities
More significantly, the representation alleges:
Mass arbitrary terminations of employees
Nearly 800 employees labelled as “absconding” within a five-month period (January to June 2024)
- Misuse of Work Improvement Plans (WIP), where employees are reportedly placed under WIP without any prior warning, documented performance issues, or progressive evaluation during the year. The timing—often just before the annual bonus cycle—raises serious concerns that such actions are used to deny earned incentives and create forced exit situations rather than genuine performance correction
- Punitive and allegedly illegal transfers to remote or distant locations, imposed not on business grounds but as a retaliatory measure, placing undue hardship on employees and pressuring compliance or resignation
These actions raise serious concerns about:
Violation of principles of natural justice
Lack of due process in disciplinary mechanisms
Possible systematic suppression of employee rights
The scale and speed of these terminations have been presented as evidence of institutionalized labour law violations rather than isolated HR decisions.
Massive GST Irregularities Across Multiple Jurisdictions
Another critical issue raised is the scale of tax compliance failures, particularly under the Goods and Services Tax (GST) regime.
Bhushan has pointed to:
Multiple GST demand notices issued by tax authorities
Actions by authorities in West Bengal, Maharashtra, and central tax departments
A cumulative financial exposure exceeding ₹1,200 crore
The representation stresses that the geographical spread and magnitude of these demands indicate:
Weaknesses in internal audit systems
Failure of compliance monitoring mechanisms
Structural lapses in financial governance
This is presented not merely as a financial issue, but as a governance and accountability failure at the highest level of management.
Questioning RBI’s Approval Process
Bhushan has also raised a fundamental question regarding the RBI’s decision-making process in approving Bakhshi’s extension.
He argues that:
Approving continuation despite documented lapses dilutes regulatory credibility
It creates a precedent where accountability is bypassed
It contradicts the RBI’s core mandate of ensuring sound governance and financial discipline
He has urged the regulator to adopt a proactive rather than reactive approach, emphasizing that regulatory action should prevent crises—not merely respond to them.
Context: Leadership and Institutional Background
Sandeep Bakhshi has been serving as MD and CEO of ICICI Bank since October 2018, following the exit of Chanda Kochhar amid earlier controversies.
His reappointment was approved by the bank’s board in line with internal governance procedures.
The bank, in past instances, has dismissed several allegations reported in the media as baseless and misleading, maintaining that it adheres to regulatory norms.
Larger Implications for India’s Banking System
The issues raised by Prashant Bhushan extend beyond one institution and strike at the heart of:
Corporate governance standards in private banks
Regulatory effectiveness and independence
Protection of employee rights in large financial institutions
Transparency and accountability in financial reporting
This development has the potential to become a benchmark case in determining how Indian regulators address repeated compliance failures in major banking institutions.
Conclusion
The representation presents a comprehensive case alleging that the continuation of current leadership at ICICI Bank is incompatible with the principles of good governance, regulatory compliance, and public accountability.
With the matter now before the Reserve Bank of India, the response of the regulator will carry far-reaching implications—not only for ICICI Bank, but for the credibility of India’s entire banking oversight framework.
The outcome will be closely watched as a test of whether regulatory institutions are willing to act decisively in the face of persistent and systemic irregularities.
Reference: The Wire