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Informist, Thursday, Mar. 19, 2026

 

By Shubham Rana

 

NEW DELHI – Atanu Chakraborty's abrupt resignation as part-time chairman of HDFC Bank, citing differences over "values and ethics", pulled the lender's stock to a near two-year low, and more worryingly, raised questions about corporate governance at the country's largest private sector bank.

 

Chakraborty, who had been HDFC Bank's part-time chairman and independent director since May 2021, resigned from his position, saying that "certain happenings and practices" in the bank over the last two years were not aligned with his personal values and ethics. HDFC Bank has appointed Keki Mistry as interim part-time chairman for three months.

 

While the bank's management was quick to allay concern over any issues with Chakraborty, the stock fell as much as 8%. It recovered from the day's lows but ended at INR 798.2 on the National Stock Exchange, its lowest since June 2024.

 

Brokerage Macquarie Capital removed HDFC Bank from its marquee buy list, saying governance concerns will weigh on the stock despite strong fundamentals. However, other brokerages retained 'buy' recommendations, comforted by the management's comments that there are no corporate governance issues at the bank.

 

The bank's senior management Thursday said Chakraborty did not highlight any specific concern, nor any concrete governance lapse or operational issue, even during the board meeting. The management, however, indicated there may have been a relationship issue between him and the management that developed over time.

 

"Post the conference call with the management, we are completely assured that there are no corporate governance issues in HDFC Bank," Siddharth Rajpurohit, lead analyst – banking at Systematix Research, said in a note. "However, we are not completely assured that there are no operational issues in the bank. There seems to be some differences of opinion at the management level leading to these ruffles. We see that it will take some time for the bank to settle all such internal issues."

 

The Reserve Bank of India also sought to ease concerns related to Chakraborty's exit, saying there are no material concerns regarding the bank's conduct or governance based on its periodic assessment. "HDFC Bank is a Domestic Systemically Important Bank with sound financials, professionally run board and competent management team," the RBI said in a statement. "The bank remains well-capitalised and the financial position of the bank remains satisfactory with sufficient liquidity."

 

The RBI's quick approval of Mistry's appointment as the interim chairman, along with clarifications from HDFC Bank's management, should allay investor concern over operational governance issues, Nirmal Bang Equities said in a note. "We thus remain positive on HDFC Bank for the long term due to its best-in-class asset quality, growth potential because of good capital position and expanding deposit franchise, potential for margin improvement and merger synergies in the long term," it said.

 

While the bank's fundamentals remain broadly strong--it reported net profit of INR 186.54 billion for the December quarter, up over 11% on year--the stock is likely to remain under pressure in the near term, analysts said. ICICI Securities has reduced its target price for HDFC Bank to INR 1,070 from INR 1,150 earlier, while maintaining a 'buy' call.

 

However, concerns around governance and management are far from over. The private-sector lender needs to find a new chairman soon, with Mistry saying on Thursday that he is not keen to continue in the interim role beyond three months.

 

HDFC Bank's board plans to meet soon to discuss the way forward and address the reputational impact, Mistry said at a press conference. The management also plans to meet major shareholders over the next couple of days to address concerns.

 

Asked about the future of board members who are set to retire or whose terms are ending, Mistry said the nomination and remuneration committee will meet in about a month to recommend new names.

 

A key concern for investors is the uncertainty around the reappointment of Managing Director and Chief Executive Officer Sashidhar Jagdishan, whose term ends in October. The bank's management said it has not yet discussed Jagdishan's reappointment.  End

 

Edited by Akul Nishant Akhoury

 

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