India’s HDFC Bank HDBK.NS said on Tuesday it had approved the appointment of external law firms to review a resignation letter from former part-time chairman Atanu Chakraborty, who stepped down last week, citing differences over “values and ethics”.
The company’s shares rose 1.3% after the news, snapping a three-day runs of losses that chipped $16.27 billion in market value from the stock with the heaviest weighting in benchmark indexes.
Earlier India’s largest private-sector lender said the abrupt exit, which slammed shares and prompted analysts to question if there were governance concerns, may have stemmed from a rift between Chakraborty and the management, while adding that there were no material issues at the bank.
Chakraborty did not detail specific issues.
“Kindly read my letter. It makes no claims or insinuations,” Chakraborty said in reply to a Reuters text message on Tuesday. “Having resigned, I do not look into actions by the organisation.”
HDFC Bank is hiring both domestic and international firms to examine the letter “to reinforce the robust governance standards of the bank”, told stock exchanges in a statement, without identifying the firms.
The law firms will study minutes of past board meetings to see if there is any truth in the differences cited by the chairman, said a source familiar with the deliberations who declined to be identified as the matter is a sensitive one.
The bank will not seek legal damages from Chakraborty for the reputational damage caused, the source added, however.
Last week, the Reserve Bank of India said HDFC Bank was financially sound and professionally managed with “no material concerns on record” about its conduct or governance.
The RBI has approved former long-time HDFC Group executive Keki Mistry as interim non-executive chairman for three months.
Chakraborty, appointed part-time chairman in April 2021 and reappointed in May 2024 through May 4, 2027, oversaw HDFC Bank’s $40-billion merger with mortgage lender HDFC Ltd, creating a financial services behemoth.
Shares of HDFC Bank have fallen nearly 12% since Chakraborty’s resignation.
CONDUCT OF INDEPENDENT DIRECTORS
Tuhin Kanta Pandey, chief of the Securities and Exchange Board of India (SEBI), which regulates listed companies, declined to comment on individual matters when asked if it would seek additional details from Chakraborty.
Independent directors must follow the code of conduct set out in regulations, Pandey added, however. This includes raising any concerns with a company’s board and insisting that the minutes of board meetings record any concerns not addressed.
“No one can make insinuations without proper evidence being recorded,” Pandey said. “Any such comments do have an impact on minority shareholders … Independent directors have to be responsible in terms of what they say.”
Chakraborty’s board position was that of an independent director and non-executive chairman.
Pandey added that the central bank, the Reserve Bank of India, which is the primary regulator of HDFC Bank, would probably look into various aspects of the matter.
(Inputs from Reuters)
Manisha Chauhan is a passionate journalist with 3 years of experience in the media industry, covering everything from trending entertainment buzz and celebrity spotlights to thought-provoking book reviews and practical health tips. Known for blending fresh perspectives with reader-friendly writing, she creates content that informs, entertains, and inspires. When she’s not chasing the next viral story, you’ll find her diving into a good book or exploring new wellness trends.
