MUMBAI — The chief executive of one of India's largest banks, and a rare woman at the top of male-dominated corporate India, resigned on Thursday amid a favoritism probe.

ICICI — India's second-largest private bank by assets — said in a statement that Chanda Kochhar was immediately stepping down as CEO. She has been the subject of an investigation over a conflict of interests, facing charges that she favored loans to a company linked to her husband.

"The board of directors... accepted the request of Ms Chanda Kochhar to seek early retirement from the Bank at the earliest.

"The Board accepted this request with immediate effect," ICICI said in a filing to the Bombay Stock Exchange.

The bank announced that head of its insurance operations, Sandeep Bakhshi, would become its new chief executive, sending shares rising by almost five percent.

ICICI added that its investigation into the conflict of interest allegations against Kochhar would be unaffected by her departure.

Kochhar, 56, is accused of sanctioning a loan worth hundreds of millions of dollars to the Videocon Group conglomerate, which had investments in her husband's renewables energy firm.

The ICICI board initially slammed the allegations, which were first made in the Indian Express newspaper as "malicious", but later opened a probe against her.

Kochhar, who had headed ICICI since May 2009, went on leave in June as the investigation got under way.

She is one of the few women to have headed up an Indian bank — Axis Bank's Shikha Sharma is another, while Arundhati Bhattacharya retired last year as the head of the State Bank of India.

India's public and private sector banks are grappling with ballooning bad loans and falling profitability as the government attempts to clean up their books. — AFP