HDFC Bank chief executive Sashidhar Jagdishan said the sudden resignation of former chairman Atanu Chakraborty in March was a “challenging event” that triggered tough questions about the lender’s corporate governance. Writing to shareholders in the bank’s FY26 annual report released on Saturday, Jagdishan sought to address the fallout from Chakraborty’s parting statements.
Following the exit, HDFC Bank moved swiftly to appoint Keki Mistry as interim chairman with RBI clearance, Jagdishan said. He noted that the day after the resignation, board members briefed analysts and the media, clarifying that Chakraborty had never raised any issues regarding practices that conflicted with his personal values or ethics during their discussions.
The controversy began in March when Chakraborty abruptly stepped down as chairman. In his 17 March resignation letter to the board, he cited “certain happenings and practices within the bank” that were “not in congruence” with his personal values and ethics, without elaborating. Days later, he went on national television to hint that the core dispute was the bank’s alleged “mis-selling” of Credit Suisse’s perpetual bonds.
“To reinforce the robust governance standards of the bank, the board of directors of the bank took the proactive step of appointing external law firms to conduct a review regarding the statement made by Chakraborty in his resignation letter,” Jagdishan said.
Extensive review
Given that the bank’s American Depositary Receipts (ADRs) are listed on the New York Stock Exchange, Jagdishan said the board opted for an expansive review using both domestic and international counsel. US-based Wilson Sonsini Goodrich & Rosati and Indian firm Wadia Ghandy & Co. were brought in to conduct the independent inquiry.
“…the board also constituted a special committee comprising solely of independent directors, to provide oversight on the legal review and ensure appropriate and timely flow of information between the bank and the law firms, in relation thereto,” Jagdishan added.
He added that the review involved analyzing vast quantities of board minutes, corporate communications, and internal materials. The legal teams also interviewed all independent directors and multiple senior executives, including him and the heads of the bank’s control and assurance functions, Jagdishan said. “The period under consideration for review was two years preceding Chakraborty’s resignation,” he noted.
On 26 June, the bank informed the stock exchanges that the law firms found “no basis” for Chakraborty’s statement.
“In sum, the contemporaneous evidence reviewed was inconsistent with Chakraborty’s statement, and external law firms’ review did not identify any basis for the statement,” the bank said in a statement late that day. It also said the bank and external law firms repeatedly requested that Chakraborty speak with them as part of the legal review, but ultimately the interview with Chakraborty did not take place.
‘Superfluous exercise’
Mint reported on 27 June that Chakraborty termed the appointment of external law firms and the resulting report a “superfluous exercise”, saying he chose not to speak because the bank refused to disclose the terms of reference or the legal basis for such a review.
Chakraborty told Mint over the phone on Saturday that he asked the bank for the terms of reference at least five or six times, but to no avail. “I do not crave the certificate of an external agency,” he said.
Appointing external law firms, including an American one, was just a compliance exercise, Chakraborty said, adding. “Jamie Dimon [chairman of the board and CEO of JPMorgan Chase & Co.] would not have come to an Indian law firm.”
On 29 June, the bank appointed former chief election commissioner (CEC) and financial services secretary Rajiv Kumar as part-time chairman.
Jagdishan said on Saturday that Kumar has “played a transformational role in revitalising [the] banking and financial services sector of the country”, and he and other members of the board look forward to working closely with him.
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