HDFC Bank systemically important with sound financials, professionally-run board: RBI on A Chakraborty resignation

The Reserve Bank of India on Thursday said it has taken note of recent developments at HDFC Bank following the resignation of part-time chairman Antanu Chakraborty.

In a press release, the central bank said it has approved a transition arrangement proposed by the bank for the position of part-time chairman.

‘No material concerns’, says RBI

Add Zee Business as a Preferred Source

The RBI described HDFC Bank as a Domestic Systemically Important Bank (D-SIB) with strong fundamentals.

“HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financials, professionally run board and competent management team. Based on our periodical assessment, there are no material concerns on record regarding its conduct or governance,” the regulator said.

It added that the bank remains well-capitalised with sufficient liquidity and a satisfactory financial position. The RBI said it will continue to engage with the bank’s board and management going forward.

Stock pares losses after RBI comment

HDFC Bank shares recovered from the day’s low after the RBI statement, though they remained under pressure. The stock was trading about 4.51 per cent lower at Rs 804.90.

Earlier in the session, the stock had hit a 52-week low of Rs 772, reflecting investor concerns after the sudden resignation.

Worst month in six years?

The stock has fallen over 9 per cent in March so far amid a broader market sell-off and the governance overhang.

If the decline continues, this could mark the worst monthly fall for the lender in six years. The last such steep fall was in March 2020, when the stock had dropped 27 per cent during the Covid-led market crash.

FII holding remains high

Foreign institutional investors (FIIs) continue to hold a significant stake in the bank. As per BSE data, FIIs owned about 47.7 per cent in HDFC Bank as of December.

What Chakraborty said in his resignation

In his resignation letter, Chakraborty said he decided to step down due to certain developments within the bank that were “not in congruence with my personal values and ethics”.

He noted that he joined the board in May 2021 and witnessed key milestones, including the merger with HDFC Ltd, which created one of the largest financial institutions in the country.

At the same time, he clarified that there were no other material reasons for his resignation beyond those stated. He thanked the board and management for their support during his tenure and wished the bank success in the future.

Full resignation letter

I hereby tender my resignation from as Part- time Chairman and Independent Director on the Board of HDFC Bank, with effect from its Date of its consideration by Board of HDFC Bank.

I joined the Board of HDFC Bank in May 2021. My tenure on the Board saw momentous events like merger of the bank with HDFC Ltd that created a conglomerate under the Bank. This strategic initiative made HDFC Bank the second largest Bank in the country. Though, the benefits of merger are yet to fully fructify.

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.

I confirm that there are no other material reasons for my resignation other than those stated above.

I would like to express my sincere appreciation to the Board and senior management for their co- operation and support during my tenure. I express my gratitude to all the Independent Directors and Non-Executive Directors, who spared their valuable time and shouldered onerous responsibilities on the Board and its Committees. It has been a privilege to contribute to the growth and governance of the Bank. I observed great amount of energy and verve in the middle & junior levels of the organization, that should form the core of a reimaged organization. I also place on record my sincere appreciation for Secretarial, Compliance, Audit and Group oversight functions.

Kindly instruct Company Secretary to take this letter on record and arrange to file the necessary intimations with the Registrar of Companies and other regulatory authorities as required under applicable law.

I wish the Bank continued success in all its future endeavors.

I remain,

Yours sincerely,
(Atanu Chakraborty)
Part-time Chairman & Independent Director, HDFC Bank