HDFC Bank chairman resigns over ethical issues, shares tank 9%
What's the story
HDFC Bank's part-time chairman and independent director, Atanu Chakraborty, has resigned with immediate effect. His resignation came as a surprise and was based on "ethical" concerns. In his resignation letter, Chakraborty cited "certain happenings and practices within the bank" that were not in line with his personal values and ethics over the last two years as the reason for his departure. Following this news, shares of HDFC Bank tanked 9% in early trade today to ₹770 apiece.
Tenure highlights
Major events during Chakraborty's tenure
Chakraborty joined HDFC Bank's board in May 2021. He witnessed major events like the merger with HDFC Ltd., which made it India's second-largest bank. However, he noted that the benefits of this merger are yet to be fully realized. Despite his resignation, Chakraborty expressed gratitude toward the board and senior management for their support during his tenure.
Official statement
HDFC Bank's response to Chakraborty's resignation
In an exchange filing following Chakraborty's resignation, HDFC Bank confirmed there are no reasons other than those mentioned in his letter. The bank also clarified that Chakraborty does not hold directorship in any other company. The Board of Directors thanked him for his contributions during his tenure and wished him success in future endeavors.
Interim leadership
Appointment of interim part-time chairman
The Reserve Bank of India has approved the appointment of Keki Mistry as the interim part-time chairman of HDFC Bank. Mistry, who was the vice-chairman of HDFC Ltd before its merger with HDFC Bank, will take over from March 19 for a period of three months. His appointment comes in light of Chakraborty's sudden resignation and aims to ensure continuity in leadership during this transition period.
Market impact
HDFC Bank shares under scrutiny
HDFC Bank's shares, a major component of the Nifty 50 and Nifty Bank index, will be under scrutiny on Thursday. Following Chakraborty's exit, US-listed shares of HDFC Bank or ADRs (American Depositary Receipt) fell over 7% overnight before gaining 1% in extended trading. However, brokerage firm JPMorgan has maintained a "neutral" rating on HDFC Bank with a price target of ₹1,090 amid geopolitical uncertainties.