HDFC Bank Engages Law Firms to Investigate Former Chairman's Resignation
HDFC Bank's Governance Under Scrutiny
New Delhi: HDFC Bank has enlisted the services of external legal firms to assess the resignation letter submitted by its former part-time chairman, Atanu Chakraborty. He resigned last week, citing conflicts regarding "values and ethics," as reported by a news agency. The largest private lender in India previously indicated that Chakraborty’s abrupt departure, which negatively impacted its stock prices and raised governance alarms, might stem from a disagreement with the bank's management. However, the bank asserted that there were no significant issues at play.
Chakraborty stepped down as part-time chairman and independent director, expressing concerns over certain practices at the bank that he felt did not align with his personal values and ethics. In his resignation letter dated March 15, he stated that observations made over the last two years were inconsistent with his ethical standards, prompting his immediate resignation. He emphasized that no other factors influenced his decision.
On Tuesday, HDFC Bank announced the hiring of both domestic and international law firms to review the resignation letter, aiming to strengthen the bank's governance standards. The bank noted that Chakraborty did not specify any practices that contradicted his values in his resignation.
In a recent statement, the Reserve Bank of India affirmed that HDFC Bank is systemically significant, financially robust, and well-managed, with no substantial governance concerns reported. Additionally, the RBI has appointed Keki Mistry as the interim non-executive chairman for a three-month period.
Chakraborty, who took on the role of part-time chairman in April 2021 and was reappointed in May 2024 until May 2027, played a crucial role in overseeing the $40 billion merger between HDFC Bank and HDFC Ltd, which established a significant financial services entity. Following his resignation, HDFC Bank's shares have experienced a decline of nearly 12%.