Shares of HDFC Bank witnessed a major selloff, crashing over 8% to 52-week low of ₹772 on Thursday, March 19 after an unexpected leadership change raised concerns over governance and internal practices at the country’s largest private sector lender.
The bank announced that its part-time Chairman and independent director, Atanu Chakraborty, has stepped down from his role. In the interim, Keki Mistry has been appointed as part-time Chairman for a period of three months, with the approval of the Reserve Bank of India.
Investor sentiment appeared to weaken following the development. The bank’s American Depositary Receipts (ADRs) fell sharply, more than 7% overnight to $26.62.
The stock has already been under pressure in recent months. HDFC Bank shares have declined 8% over the past one month, while the stock is down 13% over the last six months. On a year-to-date basis, it has fallen around 15%, reflecting persistent selling pressure.
Exit flags concerns over internal practices
Chakraborty’s resignation has drawn attention due to the reasons cited in his letter, where he pointed to concerns around certain developments within the bank during his tenure.
In his resignation note, he said that certain happenings at the bank did not align with his personal values and ethics.
“Certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal Values and Ethics. This is the basis of my aforementioned decision,” he wrote.
He clarified that there were no additional material reasons behind his decision beyond the concerns highlighted.
Reflecting on his tenure, Chakraborty noted that the bank underwent significant transformation, including the landmark $40 billion merger with Housing Development Finance Corporation (HDFC), which created a financial services conglomerate and elevated the bank’s position in the Indian banking landscape. The merger positioned HDFC Bank as the second-largest lender in India, marking a pivotal moment in its growth trajectory.
He added that while the merger was a major strategic milestone, “though, the benefits of merger are yet to fully fructify.”
Chakraborty joined the bank’s board in May 2021 and brought with him extensive experience in public policy and finance. A Gujarat cadre IAS officer, he previously served as Secretary in the Ministry of Finance, was an alternate governor on the World Bank Board, and also chaired the National Infrastructure Investment Fund.
