HDFC Bank Reportedly Considering Dropping Controversy Surrounding Ex-Regulator Amid Focus on Resignation Issues
HDFC Bank to Focus on Internal Review Rather Than Litigation Against Former Chairman
HDFC Bank is unlikely to seek damages from its former part-time Chairman Atanu Chakraborty, who resigned from the company last month citing ethics and values. According to a report by ET Now, citing people familiar with the discussions, HDFC Bank will focus on an internal review rather than seeking litigation against Chakraborty. This decision comes as the lender's Board of Directors has mandated external law firms to independently examine governance processes, accountability, and internal controls.
The move is part of HDFC Bank's push to strengthen its governance mechanism and oversight framework. The bank has appointed two domestic law firms, Wadia Ghandy & Co and Trilegal, along with one international law firm, to conduct an investigation and review Chakraborty's letter. The firms will study minutes of past board meetings to determine whether there is any truth to the differences over "values and ethics" cited in the letter.
Chakraborty resigned on 18 March, amid allegations of misselling of AT-1 bonds and underperformance of HDFC Bank. He revealed in an interview with CNBC TV18 that the misselling of AT-1 bonds and underperformance of the bank were the primary reasons behind his resignation. He also stated that personal differences with the management were "overblown" and not the issue "by a long distance".
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| Reasons for Resignation | Description |
|---|---|
| Misselling of AT-1 bonds | Viewed as a "technical issue" by management, but Chakraborty felt it should have been addressed earlier |
| Underperformance of HDFC Bank | Low share prices, lower share of cheaper current and saving account deposits, and high cost-to-income ratio |
Chakraborty was appointed part-time chairman in April 2021 and reappointed in May 2024 through May 4, 2027. During his tenure, he oversaw HDFC Bank's $40-billion merger with mortgage lender HDFC Ltd, creating a financial services behemoth.
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