HDFC Bank Stock Plunges 5% as Bank Nifty Declines 3% following Resignation of Part-time Chairman Chakraborty

HDFC Bank Shares Plummet 5% Amid Part-Time Chairman's Resignation

Overview

On March 19, shares of HDFC Bank fell 5% to Rs 802.1 apiece, while the Bank Nifty declined 3%. The sudden resignation of part-time chairman Atanu Chakraborty citing differences over "values and ethics" led to the decline.

Resignation and Appointment

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Atanu Chakraborty, part-time chairman since April 2021, resigned due to differences with the lender over values and ethics. In his resignation letter, Chakraborty stated that certain practices within the bank were not in congruence with his personal values and ethics. Keki Mistry, a long-time group insider, was appointed as interim part-time chairman for three months, effective March 19.

Market Reaction

US-listed shares of HDFC Bank slipped 7% following the announcement. Bank Nifty was trading 3% lower, with HDFC Bank leading the losses, followed by Axis Bank and ICICI Bank, which declined 3.3% and 2.2%, respectively.

Analyst Views

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Analysts have expressed concerns over the impact of Chakraborty's resignation on governance risk premium embedded in the shares. Anuj Singla, analyst at J.P.Morgan, stated that the perception of misconduct could weigh on sentiment until credible steps are outlined and delivered.

Background

Atanu Chakraborty was appointed as part-time chairman in April 2021 for a three-year term and reappointed in May 2024 through May 4, 2027. During his tenure, HDFC Bank merged with housing finance firm HDFC Ltd in a $40 billion deal, creating a financial services behemoth.