The banker, Indian national Shankar Mishra, was allowed to disembark as normal when the aircraft landed in India and no immediate action was taken.
The woman complained and, after the story was widely reported in the Indian media, police arrested Mishra weeks later after he went to ground and reportedly switched off his phone.
US bank Wells Fargo fired him from his job as vice president of its Indian operations after the "deeply disturbing" allegations.
Air India faced severe criticism for its handling of the woman's complaint and the airline's chief executive was forced to issue an apology.
"Air India acknowledges that it could have handled these matters better, both in the air and on the ground and is committed to taking action," chief executive Campbell Wilson said.
Mishra has been refused bail. His lawyer, Ramesh Gupta, told a hearing last week that the woman, an Indian classical dancer, had in fact urinated on herself.
According to Indian media, Gupta also said that, because of where she was seated, it was impossible for Mishra to have urinated on her without also doing so on another woman who has "made no such complaint".
The case is the latest embarrassing incident to be reported in India's booming airline sector in recent months, including shirtless brawls and passengers having heated arguments with cabin crew.
Another inebriated man was accused of urinating on the blanket of a woman on a flight from Paris to India last month but no action was taken after he issued a written apology, reports said.