RBI backs HDFC Bank after chairman quits over ethics
What's the story
The Reserve Bank of India (RBI) has said there are "no material concerns" over HDFC Bank's conduct or governance. The statement comes after the resignation of the bank's part-time chairman Atanu Chakraborty over ethical differences. The RBI approved a transition arrangement as requested by the bank for this position, and emphasized that HDFC Bank is a well-capitalized institution with strong financials and competent management team.
Financial stability
HDFC Bank has professionally run board: RBI
The RBI further clarified that HDFC Bank, a Domestic Systemically Important Bank (D-SIB), has a professionally run board and a competent management team. "Based on our periodic assessment, there are no material concerns on record as regards its conduct or governance," the central bank said. It added that the bank remains well-capitalized with a satisfactory financial position and adequate liquidity.
Leadership change
Chakraborty resigned citing differences over values, ethics
Chakraborty resigned from his position citing differences with the bank over "values and ethics." He had been on the board since May 2021 and was serving his second term. HDFC Bank has appointed Keki Mistry, an insider, as its interim part-time chairman for three months from March 19. This transition arrangement has been approved by RBI as well.
Market reaction
Shares of HDFC Bank fell nearly 5%
Following these developments, shares of HDFC Bank fell nearly 5% to ₹801.25, hitting an intraday low of ₹775—close to a two-year low. Its American Depositary Receipts (ADRs) also declined over 7.5% to $26.6. In a call held early Thursday, the bank said it was not aware of the specific reasons behind Chakraborty's resignation despite repeated queries for clarification.