Kochhar challenges RBI decision to terminate her; HC seeks bank’s response

Banking Regulation Act says that prior approval of the RBI is required to terminate the contract of a bank’s chairman or managing director

Chanda Kochhar, former managing director and chief executive officer of ICICI Bank, on Monday challenged the Reserve Bank of India’s (RBI) approval in terminating her. She said the move was illegal and had no legal base.

The central bank on March 13 gave its consent to the bank management on Kochhar’s termination, after the bank fired her on January 31. Kochhar is now contesting that the bank should have secured the RBI’s permission first before terminating her services.

Chanda Kochhar had originally moved against the bank, but decided to file an amended petition, making the central bank party to the case. Following the amended petition on Monday, the Bombay High Court served notice to the RBI, seeking its response. The case will be next heard on December 18. The amended petition argued that the bank wrote to the RBI on February 5, days after serving her the termination letter on January 31. The RBI subsequently approved the move on March 13.

“The RBI issued the alleged approval without due and proper application of mind and in colorable exercise of powers, by mechanically accepting the mala fide request of the respondent bank (ICICI) without disclosing contents thereof to the petitioner (Kochhar) and contrary to the provisions of Section 35B (1)(b) of the Banking Regulations Act,” Kochhar said in her petition.