HDFC Bank shares fell on Thursday after Chairman Atanu Chakraborty resigned over an ethics dispute. As a result, the stock dropped almost 5% in trade, and the move drew attention to governance questions at India’s largest private lender.
Chakraborty said some bank practices were “not in congruence with” his “personal values and ethics.” Meanwhile, HDFC Bank said it saw no material issue behind the resignation beyond the letter itself.
Chakraborty resigned with immediate effect after serving on the HDFC Bank board since 2021. In his letter, he referred to “certain happenings and practices within the bank.” However, he did not identify any specific event in the public disclosure. Consequently, that wording unsettled investors and pushed HDFC Bank shares lower during Thursday’s session.
HDFC Bank then tried to calm the market after the announcement. The bank said there were “no reasons other than those mentioned” in the resignation letter. In addition, it suggested the exit may reflect a relationship issue with management. Later, interim chairman Keki Mistry said there were “no power struggles within the bank.” He also added that the resignation had “nothing to do with operational profitability of bank.”
The Reserve Bank of India moved quickly after the resignation became public. It approved former HDFC Group executive Keki Mistry as interim non-executive chairman for three months. At the same time, the central bank issued a rare public statement on the lender. RBI said HDFC Bank had “sound financials,” a “professionally run board,” and a “competent management team.”
Moreover, RBI said it had “no material concerns on record” regarding the bank’s “conduct or governance.” The regulator also said the lender remained “well-capitalized” with “sufficient liquidity.” Therefore, the statement aimed to separate the resignation from the bank’s balance sheet and daily operations. In turn, it signaled that the regulator saw no immediate threat to financial stability.
Mistry told analysts that board discussions had not raised governance lapses. He said he was “not aware” of the issues Chakraborty mentioned in the letter. He also said discussions had shown no “specific operational or other issues.” Thus, those remarks aimed to frame the episode as a personal disagreement, not a wider governance failure.
Even so, the development drew market attention because HDFC Bank holds a systemically important status in India. Reportedly, the lender has over ₹40.89 trillion in assets and more than 120 million customers.
Chakraborty also noted that the merger with HDFC Ltd created a much larger banking group. He said the merger benefits had “yet to fully fructify.”