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Informist, Monday, Mar. 23, 2026

 

--CONTEXT: Comments by SEBI officials at press conference post board meet 
--SEBI Pandey on HDFC Bank matter: Independent directors must act responsibly 

 

MUMBAI – Securities and Exchange Board of India Chairman Tuhin Kanta Pandey on Monday underscored the heightened responsibility of independent directors in safeguarding corporate governance, particularly in light of recent developments at HDFC Bank, saying that board members must ensure their concerns are formally recorded and avoid making unsubstantiated remarks that could impact minority shareholders.

 

Responding to queries on comments made in the resignation letter of Atanu Chakraborty as part-time chairman of HDFC Bank, the SEBI chief refrained from commenting on the specifics of the case but emphasised that a well-defined regulatory framework already governs the conduct and duties of independent directors.

 

"Independent directors are in a very important position," he said, pointing to the code of conduct laid down under SEBI's listing regulations as well as the Companies Act. These provisions require independent directors to actively raise concerns about the functioning of a company and ensure that such concerns are formally discussed and documented at board meetings.

 

Citing regulatory provisions, the chairman noted that if independent directors have reservations regarding the management of a company or any proposed action, they are obligated to ensure that these concerns are addressed by the board. If the issues remain unresolved, directors must insist that their dissent or observations are recorded in the minutes of the meeting.

 

He further highlighted that the code also mandates directors to report any instances of unethical behaviour, suspected fraud or violations of a company's code of conduct. "There is a process which is there, and obviously, if there is any concern, then it has to be there in the board meetings...it cannot be just general," he said, indicating that governance issues must be handled through formal institutional mechanisms rather than informal or post-facto communication.

 

The comments come against the backdrop of market volatility triggered by remarks in Atanu Chakraborty's resignation letter that alluded to "ethical differences" within the board of HDFC Bank. The statement had led to confusion among investors and a notable impact on the bank's share price, raising questions about the role and accountability of independent directors in communicating sensitive governance issues. Shares of the bank, which fell over 8% Friday, closed nearly 5% lower at INR 744.15 on the National Stock Exchange on Monday.

 

Without directly addressing the specifics of the resignation, the SEBI chairman cautioned that statements made by board members--especially independent directors--carry significant weight and can influence investor sentiment. "Nobody is expected to make any insinuations without proper evidence or recording," he said, adding that such remarks can have a direct bearing on minority shareholders' interests.

 

He stressed that independent directors, by virtue of their position, are not only expected to exercise oversight but also to act responsibly in their public and private communication.

 

On the question of whether SEBI would initiate any inquiry into the matter, the chairman maintained that the primary responsibility for banking sector oversight lies with the banking regulator, the Reserve Bank of India, while SEBI's role is focused on market conduct and disclosures. He indicated that regulatory responses, if any, would be guided by established processes rather than public commentary.  End

 

Reported by Kabir Sharma and Anshul Choudhary

Edited by Ashish Shirke

 

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