Chandra is the managing director of Unitech Ltd, which is Telenor's partner in their India mobile joint venture Unitech Wireless. Telenor owns a controlling stake in the venture.
Telenor said in a statement it had asked Unitech to name a replacement for Sanjay Chandra for as long as the 2G telecoms court case is ongoing in India.
A Central Bureau of Investigation (CBI) court earlier on Wednesday rejected bail applications of five executives, including that of Chandra.
A lawyer for the CBI said the executives would remain in jail until a higher court granted bail.