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Juvina Maggie made post

Why did RBI reject the contention of Chanda Kochhar of ICICI Bank over her removal from the helm of ICICI Bank?

Answer
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Angel dcosta answered.
8 months ago


The issue came up after the lawyers of Chanda Kochhar case had made the RBI a party to the dispute since the RBI had approved her removal from the CEO position at ICIC Bank. During the hearing, the RBI told the Bombay High Court that its decision to grant approval to ICICI Bank for termination of appointment of Chanda Kochhar as MD and CEO was fair and not arbitrary. The RBI actually filed an affidavit in response to a petition filed by Kochhar last month, challenging her ouster as the MD and CEO of ICICI Bank months. Her objection had been that she was removed from the post after her resignation was accepted by the board of the bank. Her contention was that since the resignation had already been accepted and she had been relieved, the termination was redundant.

One of the major bones of contention between the bank and Chanda Kochhar was that ICICI Bank had not only terminated her employment but had also denied her remuneration and rescinded the bonuses and stock options given to her from April 2009 to March 2018. It may be recollected that Chanda was held guilty of playing a role in granting out-of- turn loans of Rs.3250 crore to Videocon Group. Not only did these loans end up becoming NPAs, but there was a clear conflict of interest as her husband, Deepak Kochhar, had been a beneficiary of this facility as he had an ongoing business relation with Videocon Group. In short, the allegation was that there was a quid pro quo.

Chanda's lawyers have argued that her termination came months after the bank had already accepted her voluntary resignation on October 5, 2018, and therefore the sacking was illegal. Since the RBI had approved the termination (all bank CEO appointments and terminations have to be approved by RBI), the RBI had been made a party to the case filed by Chanda Kochhar. However, the RBI has clarified that there was clearly no violation of Kochhar's fundamental rights as there had been adequate grounds for her to be removed and also a lot of questions that she had to answer. RBI has also added that it does not sit on judgment over the legality of the action not does it get involved in employee-employee disputes as they are internal to the bank.

The moral of the story appears to be that Kochhar’s team appear to be fighting on technical grounds whereas the issue is something much bigger. It appears that it will be hard to purely play the game on technical grounds.