HDFC Bank's Former Chairman Denies Resignation Contributed to Erosion of Share Value

HDFC Bank Share Price Falls 12% Following Atanu Chakraborty's Resignation

On March 30, former HDFC Bank chairman Atanu Chakraborty denied that value erosion in the bank's stock was a result of his resignation earlier this month. Chakraborty cited concerns over ethics and values as the reason for his departure from the country's largest private sector lender.

Market Impact HDFC Bank shares experienced a decline of 12% over three sessions following Chakraborty's resignation, resulting in a market valuation erosion of Rs 1.52 lakh crore. This significant drop in share price has raised concerns among investors.

Resignation Reasons Chakraborty's resignation was reportedly due to a power struggle with CEO Sashidhar Jagdishan. The Financial Times reported that Chakraborty had opposed extending Jagdishan's tenure, but a majority of the board favored it. Chakraborty stated that the matter had not even been discussed, leading to differences between him and the CEO.

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Growing Sense of Incongruence Chakraborty attributed his resignation to a growing sense of "incongruence" over two years, citing issues such as low CASA (Current Accounts Savings Accounts) and low income ratio. He emphasized that addressing underperformance is part of the duty of independent directors.

HDFC Bank Review In response to Chakraborty's resignation, HDFC Bank announced that it has brought in external law firms to review the resignation letter. The bank stated that it was hiring both Indian and international firms to strengthen its strong governance standards. Chakraborty responded that appointing law firms was a compliance requirement, and his letter addressed a larger governance issue.

Key Dates

• March 30: Chakraborty denied that value erosion was a result of his resignation.
• March 18: Chakraborty submitted his resignation letter.
• Last week: HDFC Bank announced the review of Chakraborty's resignation letter.

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