Monday's statement said Kocchar will remain in her role as MD and CEO of ICICI Bank and Bakhshi will report to her.
When allegations of conflict of interest against the bank's CEO Chanda Kochhar first surfaced, the board did not give the impression of taking these seriously.
The bank said he will be responsible for handling all the businesses and corporate centre functions at the bank.
"In line with the highest levels of governance and corporate standards, Ms. Chanda Kochhar has chose to go on leave till the completion of the enquiry as announced on May 30, 2018".
"The appointment of Mr. Sandeep Bakhshi as chief operating officer is the most practical middle ground that the board could have adopted". All the executive directors on the board of ICICI Bank and the executive management will report to him.
The ICICI Bank board also recommended the appointment of N. S. Kannan as the managing director and CEO of ICICI Prudential.
Kochhar, who has been in sharp focus over the loans ICICI sanctioned to the Videocon Group, is now on leave but has more than year in her as CEO under the contract. ICICI director NS Kannan has been named the new operational head of ICICI Pru Life. It is likely that she may be asked to step down, the report says. A day before the report is published, the bank sends out a statement terming the charges against Kochhar as "malicious and unfounded rumours". An adverse finding could cut short even her present tenure Kochhar, who was on annual leave from the beginning of month, resumed office on Monday-if only briefly- and attended the board meeting which appointed Bakshi. Ms Kochhar has been facing allegations made by a whistleblower about sanctioning of loans to the Videocon Group in lieu of investments made in the companies promoted by her husband.
Even as the Board stood by her, details of misdoings emerged in the media, triggering a multi-agency probe against Kochhar by various law enforcement agencies.
It was alleged that a company related to Videocon group chairman Venugopal Dhoot invested ₹64 crore in NuPower in 2010 and later, the proprietorship of the company was transferred to a trust owned by Mr. Kochhar for ₹9 lakh after the Videocon Group received a loan of ₹3250 crore from ICICI Bank in 2012. The ICICI Bank CEO is now on a planned leave.
The market had been anticipating the decision on Kochhar. On Tuesday, ICICI Bank shares were down 0.65% in early trade on BSE, as compared to a 0.40% fall in Sensex.
Kochhar was on the credit committee that approved the loan to Videocon.