HDFC Bank Chairman Quits Citing 'Ethical' Concerns, Shares Fall Over 4%

In a sudden move, HDFC Bank's part-time chairman and independent director Atanu Chakraborty resigned with immediate effect on Wednesday. 

In a letter to the Chairman of Governance, Nomination, Remuneration Committee of the bank, Chakraborty said, "Certain happenings and practices within the bank, that I have observed over the last two years, are not in congruence with my personal values and ethics. This is the basis of my aforementioned decision." The letter added, "I confirm that there are no other material reasons for my resignation other than those stated above." 

Chakraborty, who joined the board of HDFC Bank in May 2021, further wrote, "My tenure on the board saw momentous events like the 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."

Speaking to NDTV Profit over his exit, Atanu Chakraborty said, "HDFC Bank is an organisation I nurtured for 5 years. I am not pointing out any wrongdoings at the bank. My ideologies did not match with the organisation, and hence it was time to part ways."

According to reports, all was not well on the board about the functioning of the bank for some time. However, Chakraborty has thanked the board in his letter. He said, "I would like to express my sincere appreciation to the Board and senior management for their cooperation and support during my tenure. I express my gratitude to all the Independent Directors and Non-Executive Directors, who spared their valuable time and shouldered onerous responsibilities on the Board and its Committees."

Following his resignation, the HDFC Bank, in an exchange filing, said, "We confirm that there are no reasons other than those mentioned in the said letter, for the resignation of Chakraborty." It added, "Further, Chakraborty does not hold directorship in any other company. The Board of Directors places on record its appreciation for Chakraborty's contribution to the bank during his tenure and wishes him all the success in his future endeavours." 

Notably, the Reserve Bank of India okayed the appointment of Keki Mistry, who served as the vice-chairman of HDFC Ltd before its merger with HDFC Bank, as the interim part-time chairman of HDFC Bank with effect from March 19 for three months.

Atanu Chakraborty: Professional Background

A retired IAS officer of the Gujarat cadre, Chakraborty has held various government posts such as Secretary in the Ministry of Finance (Department of Economic Affairs) during FY 2019-20. In his role as the Secretary (DEA), he coordinated economic policy making for all ministries/ departments. He also managed the entire process of formulation of Budget making, including its passage in Parliament.

Previously, Chakraborty served as Director and subsequently as Joint Secretary, Ministry of Finance (Department of Expenditure). During this period (2002-2007), he appraised projects in the infrastructure sector. Besides, he also looked after government subsidies. Chakraborty also played a crucial role in updating and modernising the government's financial and procurement rules.

Additionally, Chakraborty also discharged varied roles in the Gujarat government, including heading the Finance Department as its Secretary. He oversaw the private sector investment legislation in the state. He worked on the ground in both public governance and development areas in Gujarat.

Impact On HDFC Bank Shares

Following Chakraborty's exit, shares of HDFC Bank Ltd., one of the biggest constituents of the Nifty 50 and Nifty Bank index, will be in focus on Thursday. In response to these developments, the US-listed shares of HDFC Bank or ADRs (American Depositary Receipt), fell over 7 per cent overnight, before gaining 1 per cent in extended trading. In the Indian markets, HDFC Bank shares fell 4.73 per cent. At 9:38 am, its share price was down to 800.40 from the previous close of Rs 842.95. FOLLOW LIVE UPDATES

However, brokerage firm JPMorgan maintained a "neutral" rating on HDFC Bank with a price target of Rs 1,090. "We believe that the stock is likely to trade weak following the resignation announcement, with impact further amplified by a softer macro backdrop amid geopolitical uncertainties," the brokerage wrote.

Significantly, shares of HDFC Bank are trading close to their 52-week low of Rs 812, closing 0.4 per cent lower on Wednesday at Rs 842. The stock is down 8 per cent over the last one month. HDFC Bank is the second largest bank with a market capitalisation of Rs 12.97 lakh crore.