HDFC Bank Chairman Atanu Chakraborty Resigns; RBI Finds No ‘Material Concerns’ on Governance

One of India's largest private lenders, HDFC Bank came into focus following the resignation of its Non-Executive Chairman Atanu Chakraborty. Responding to the development, the Reserve Bank of India (RBI) on Thursday clarified that it has not found any "material concerns" regarding the bank's conduct or governance.

HDFC Bank Non-Executive Chairman Atanu Chakraborty Resigns; RBI Assures No Governance Concerns

In its statement, the central bank described HDFC Bank as a Domestic Systemically Important Bank (D-SIB) with strong fundamentals. It highlighted that the bank has sound financials, a professionally run board, and a competent management team. The regulator added that, based on its periodic assessment, there are no material concerns on record regarding the bank's governance or conduct.

"The Reserve Bank has taken note of the recent developments in HDFC Bank. A transition arrangement as requested by the Bank has been approved by Reserve Bank as regards the position of Part Time Chairman of the Bank," the central bank noted.

The Reserve Bank further said that HDFC Bank remains well-capitalised and financially stable, with adequate liquidity. It also confirmed that it has taken note of the recent developments and approved a transition arrangement regarding the position of part-time Chairman, as requested by the bank. The regulator added that it will continue to engage with the bank's board and management on the way forward.

Atanu Chakraborty's Resignation Letter Mentions 'Happenings' Not in Line With Personal Ethics

The clarification came after Chakraborty stepped down from his role, citing certain developments and practices within the bank that, according to him, were not aligned with his personal values and ethics. In his resignation letter, he noted that these issues had emerged over the past two years, although he did not specify further details and stated there were no other material reasons behind his decision.

"Certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal values and ethics," Chakraborty wrote.

Keki Mistry Assures Stability After Chairman Exit, RBI 'Comfortable' With Situation

Following the resignation, interim chairman Keki Mistry sought to reassure investors, stating that there had been no discussion within the board regarding governance issues. He said that none of the board members were aware of the concerns raised by Chakraborty and emphasised that the development was not linked to the bank's operational profitability.

He also noted that the Reserve Bank is fully informed and remains comfortable with the situation.

Echoing a similar stance, HDFC Bank's Chief Executive Officer Sashidhar Jagdishan said the bank would continue to ensure that trust in the institution is maintained, indicating that operations remain stable despite the leadership change.

GoodReturns has reached out to HDFC Bank for comment on the development, and a response is awaited.

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