“On behalf of the board and in full alignment with the executive leadership, I wish to assure all stakeholders that there are no material matters at this point in time,” said Keki Mistry, interim chairman of HDFC Bank, during a media call.
Mistry added that despite repeated requests from board members, exiting chairman Atanu Chakraborty did not specify any concerns that prompted him to exit 14 months before the end of his second term.
The incoming interim chairman, a veteran at the mortgage lender Housing Development Finance Corp, the erstwhile parent of the lender, stressed his personal commitment to help rebuild trust in a bank that has the second-biggest depositor base in the country.
“At the age of 71, I would not have taken on this responsibility if the bank’s governance standards and ethos were not aligned with my values,” Mistry said.
He added that relationship issues could have played a role in the exit of his predecessor. “I think, to my mind, there could be a relationship issue between him and the management. That may have manifested over a period of time.”
HDFC Bank’s stock fell 5.13% to close at ‘799 per share, having plunged to ‘770 apiece early morning. ‘Robust’ Credentials
The Centre, meanwhile, stressed the lender’s fundamentals to demonstrate its alignment with the satisfactory regulatory view on the bank, the biggest by market value.
“HDFC Bank is a strong institution with strong fundamentals,” Financial services Secretary M Nagaraju said, adding that the banking regulator had already issued a statement on its assessment of the lender.
CEO Sashidhar Jagdishan, whose second term is due to end in October, signalled a larger role for Kaizad Bharucha, the current deputy managing director, during the management call.
“He handles the asset business of the balance sheet, which reflects the respect and stature he commands within the organisation, both at the board and at the management level,” Jagdishan said. “So, that will continue. In fact, he will only get more responsibilities as we move forward.”
Mistry added that the Nomination and Remuneration Committee (NRC) will meet within the next month to recommend the appointment of the managing director and CEO to the Reserve Bank of India, a move that could help remove any overhang around the reappointment of CEO Jagdishan.
Chakraborty, who had been on the board since May 2021 and was serving his second term, resigned with immediate effect, stating that certain developments over the past two years were not in line with his personal values and ethics.
Accent on ‘Trust’
Mistry said the board and management are united and will work to address any concerns and restore confidence. “The management will be engaging with major shareholders over the next couple of days to address any fears. I do not believe there is any governance-related issue in the bank,” he said.
Mistry also added that the banking regulator has not flagged any issues requiring corrective action after this incident.
Board member Renu Sud Karnad said Chakraborty was repeatedly asked to elaborate on his remarks but declined to provide details.
“If there was anything, we would have corrected it. Each time we asked, his response was that there was nothing specific, which is what was baffling,” she said on the media call.
During the same call, Jagdishan explained the sequence of events leading up to the abrupt resignation. During the board meeting, he said, members attempted to persuade Chakraborty to reconsider or elaborate on his concerns.
As developments unfolded, a group of directors, including two whole-time and two independent members, met officials of the RBI later on Wednesday evening to brief them on the situation.
Jagdishan said the regulator was supportive, as reflected in the swift approval of the interim chairman, indicating confidence in the bank’s board, management, and the overall franchise.
