MUMBAI: The Reserve Bank of India (RBI) has clarified to the Bombay High Court that ICICI Bank NSE -0.80 % had sought its prior permission before sacking its former chief Chanda Kochhar over alleged quid pro quo transactions.
The banking regulator in an affidavit submitted to the High Court on Wednesday stated that it had acted under powers conferred upon it under the Banking Regulation Act and no mala fide intent should be attributed to its move.
It said ICICI Bank had sought Kochhar’s termination on the basis of Justice Srikrishna panel report that said she had violated the bank’s code of conduct.
Section 35B (1) of the Banking Regulation Act provides that no changes to the appointment, termination or remuneration of a bank chief will be made without the express approval of the Reserve Bank.
Last month, Kochhar had moved the High Court against her former employer for terminating her employment after it accepted her request for early retirement. She had alleged that no prior approval was sought from the banking regulator and that it was a breach of a statutory obligation.
The High Court had sought clarification from the RBI over Kochhar’s termination.
“The exercise of powers of the RBI was an exercise within the jurisdiction, proper and in good faith, after properly considering the request of the ICICI Bank,” the RBI said in its affidavit. “It is not the function or role of the RBI while exercising such power to micromanage the actions of a bank and substitute its commercial wisdom for that of the bank.”
It also states that ICICI Bank in a letter dated February 5, 2019, had informed the central bank of finding Kochhar guilty basis the Justice Srikrishna enquiry. In the same communication, the bank had reconsidered her early retirement and sought the RBI approval for treating her exit as a termination. The RBI had allowed the request.
Source: economictimes.indiatimes.com