Chanda Kochhar’s services terminated as per law: RBI

The Reserve Bank of India (RBI), through an affidavit on Wednesday, opposed the petition filed by Chanda Kochhar, former managing director and chief executive officer

The Reserve Bank of India (RBI), through an affidavit on Wednesday, opposed the petition filed by Chanda Kochhar, former managing director and chief executive officer of the ICICI Bank, which claimed that “termination of her services breached her rights”.

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The affidavit stated RBI has acted in accordance with the statutory provisions. “While giving regulatory approval for termination of appointment of a managing director, RBI does not sit in judgement over the legality of actions taken by the banking company in pursuance with its contracts with the person concerned. Such actions are for the banking company to justify. When RBI grants approval it is looking at the issue from regulatory angle…RBI does not get involved in employer – employee disputes,” it stated.

The affidavit stated that ICICI Bank took a decision regarding its MD and CEO and sought approval from RBI before bringing it into effect, and the banking regulator, after due consideration, granted its approval.

According to Kochhar’s petition filed through advocate Sujay Kantawalla, she joined ICICI Bank as management trainee in April 1984 and went on to become managing director (MD) and chief executive officer (CEO) of the private bank in May 2009. Her appointment continued from time to time and was last approved by RBI till March 31, 2019. Before she could complete the term, Kochhar applied for early retirement and it was accepted by ICICI Bank board.

On January 30, 2019, she was informed that the board of directors had decided to “treat her separation from the bank as termination for cause” under the bank’s internal policies, schemes and the code of conduct in view of the enquiry report submitted by Justice (retired) Shrikrishna. She was also informed that the acceptance of her plea for early retirement had been revoked with immediate effect because of which the bank was required to recover from her the entire bonus amount, ₹7.42 crore, paid to her from April 2009 to March 2018 – her entire tenure as MD and CEO.

Kochhar termed the termination as “ex-facie illegal and untenable, as it was without previous approval of the RBI, as required under Section 35B of the Banking Regulation Act, 1949”. She claimed RBI approved the termination of her services only on March 13, 2019. She also complained about denial of the agreed remuneration, although her plea for early retirement, with effect from October 4, 2018, was accepted by the board of directors of the ICICI Bank.