RBI Defends Its Nod To Sack Former ICICI Bank Boss Chanda Kochhar; Tells Bombay HC It Acted As Per Statutory Norms

The Reserve Bank of India (RBI) told the Bombay High court that its approval of the move to terminate former ICICI Bank Managing Director and Chief Executive Officer Chanda Kochhar was within its jurisdiction and was given after considering the request of her former employer.

The RBI’s reply was in response to Kochhar’s petition which alleged that the its nod to her termination was illegal.

The RBI said while approving Kochhar’s termination, it acted in accordance with statutory provisions.

It also said, “While giving regulatory approval for termination of appointment of a managing director, the RBI does not sit in judgment over the legality of actions taken by a banking company in pursuance of its contracts with the person concerned.”

During the last hearing of the matter, Kochhar had contested that ICICI Bank should have secured the RBI’s permission before terminating her services. Kocchar’s lawyers have argued there was a breach of statutory obligation.

ICICI Bank has questioned the maintainability of the writ petition arguing that it is “a private banking company and the writ petition seeks to contest what are purely private contractual terms”. The RBI has also seconded ICICI Bank’s view.

However, Kochhar’s lawyers also brought in the merits of the matter under which the petition is maintainable. They argued that as the RBI is the banking regulator and its prior approval is required before terminating services, and as the RBI is a respondent in the matter, the writ petition falls under an exception.

The Bombay High Court has given three weeks’ time to ICICI Bank to file a detailed affidavit on the merits of Kochhar’s termination and why a prior approval of the banking regulator was not taken. It has also asked the RBI to file a reply. The matter will be next heard on January 13.