HDFC Bank ADR Plunges 7.5% as Part-Time Chairman Chakraborty Steps Down Amid Ethical Disagreements

HDFC Bank ADRs Plunge 7.5% Amid Part-Time Chairman's Resignation

HDFC Bank's American Depository Receipts (ADRs) closed trading at 7.5% lower on March 15, following the resignation of part-time chairman Atanu Chakraborty. Chakraborty cited differences with the lender over "values and ethics" in his resignation letter.

Background

Atanu Chakraborty was appointed as part-time chairman in April 2021 for a three-year term and reappointed in May 2024 for an additional term extending through May 4, 2027. During his tenure, HDFC Bank merged with HDFC Ltd in a $40-billion deal to create a financial services conglomerate. However, Chakraborty noted in his resignation letter that the benefits of the 2022 merger were "yet to fully fructify".

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Interim Appointment

The Reserve Bank of India has approved the appointment of Keki Mistry as an interim part-time chairman, effective March 19, for a three-month term.

Market Impact

The resignation of Atanu Chakraborty has sent shockwaves through the market, with HDFC Bank holding the highest weightage in India's two main indices - Nifty (11.8%) and Nifty Bank (19.7%). Indian shares are poised to open lower on March 19, with the GIFT Nifty trading 2% lower. The escalation of the Iran war and a hawkish tone from the US Federal Reserve have contributed to growth worries, with Brent crude jumping above $110 a barrel.

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Foreign Portfolio Investors

Foreign portfolio investors sold Indian shares worth Rs 2,714 crore on Wednesday, marking their 14 consecutive sessions of selling. Higher US rates make emerging markets such as India less attractive to foreign investors.