RBI defends the approval of termination of Chanda Kochhar

The Reserve Bank of India (RBI) told the Bombay High Court that the decision it took to grant approval to ICICI Bank for termination of appointment of Chanda Kochhar as MD and CEO was not ant arbitrary decision, and was fair.

Last month, central bank files an affidavit in response to a Kochhar’s petition, challenging her ouster as the chief executive and managing director of ICICI Bank months after she voluntarily left the private sector lender.

The bank terminated the employement and also didn’t give any remuneration plus rescinded the stock options and bonuses which was provided to her since April 2009 to March 2018.

She was accused that she played a role in grant of out-of- turn loans of ₹3,250 crore to Videocon Group, which was indirectly benefit for her husband, Deepak Kochhar.

Chanda Kochhar’s lawyers Vikram Nankarni and Sujay Kantawalla argued that the sacking was iillegal as the court has ordered termination months after she has resigned and was accepted by bank.

The RBI in its affidavit said no violation was there in  Kochchar’s fundamental rights, and its decision to approve the termination of her services was devoid of any “malafides or arbitrariness”.

On such approvals, RBI doesn’t sit on legality for judgments.

“RBI does not get involved in employee-employee disputes,” the affidavit said.

“It is not the function of RBI to micromanage the actions of the bank and substitute its commercial wisdom for that of the bank,” the affidavit filed by Navin Nambiar, General Manager of RBI’s Department of Regulation, said.

on February 2, 2019,  the central bank got a letter from ICICI Bank where it informed that the bank’s Board of Directors has considered the report submitted by the Justice Srikrishna committee and concluded that Kochhar was guilty and reconsidered her early retirement, the affidavit said.

ICICI Bank then sought regulatory approval from the RBI for Kochhar’s termination, as required under section 35B (1) of the RBI Act, it said.

“The letter was carefully considered….The RBI vide its letter dated March 13, 2019, accorded its approval to ICICI and advised that the termination of appointment would be as of October 4, 2018, the last working day of the petitioner (Kochhar),” the RBI said.

Both RBI counsel Venkatesh Dhond and ICICI Bank counsel Darius Khambata on Wednesday contended before a division bench of Justices R V More and S P Tavade that Kochhar’s petition was not maintainable.