After Chairman’s sudden exit, RBI backs HDFC Bank, says no governance concerns

Following the resignation of HDFC Bank’s Chairman Atanu Chakraborty, the Reserve Bank of India said it had no concerns regarding the bank’s conduct or governance, affirming its strong financial position and competent management. Keki Mistry has been appointed as interim chairman for three months.

A day after HDFC Bank’s Chairman Atanu Chakraborty resigned, the Reserve Bank of India on Thursday said it held no concerns on the “conduct or governance” at India’s largest private sector lender.

A RBI statment noted that it has taken note of the recent developments at the private sector bank and the transition arrangement for the position of part-time chairman requested by the lender has been approved.

“HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financials, professionally run board and competent management team. Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance,” RBI said.

The banking regulator also said that it will continue to engage with HDFC Bank’s board and management on the way forward and that the bank remains well-capitalized and the financial position remains satisfactory with sufficient liquidity.

HDFC Bank on Wednesday said its part-time chairman Atanu Chakraborty has resigned with immediate effect, with his letter from 17 March to the board citing “certain happenings and practices within the bank” that were “not in congruence” with his personal values and ethics.

In a late-night announcement Wednesday, HDFC Bank said RBI had approved the appointment of board member and HDFC group veteran Keki Mistry as an interim part-time chairman for three months from 19 March.

“We confirm that there are no reasons other than those mentioned in the said letter, for the resignation of Chakraborty,” the bank said.

‘No governance issues’

Mistry said on Thursday that discussions so far had thrown up no operational or governance lapses. “Based on our discussions, there were no specific happenings and practices that were brought to our attention. There were no specific operational or other issues that have been highlighted,” he said on a conference call, hours after being elevated to the role.

Chakraborty, who had joined the board of HDFC Bank in May 2021, said his tenure saw “momentous events like merger of the bank with HDFC Ltd that created a conglomerate under the bank.” “This strategic initiative made HDFC Bank the second largest bank in the country. Though, the benefits of merger are yet to fully fructify.”

According to HDFC Bank’s disclosures on its website, Chakraborty has mainly worked in areas of finance and economic policy, infrastructure, and petroleum and natural gas. In the Union government, he held various posts such as secretary in the ministry of finance during FY19-20.

HDFC Bank will soon see another board member exit on account of retirement. In January, the bank said that board member Bhavesh Zaveri will not seek reappointment.

“He seeks to explore opportunities outside the banking sector, including in the group companies, if possible,” it said on 17 January. An executive director of the bank since April 2023, Zaveri heads HDFC Bank’s ATM, operations and administration functions.