Chairman’s exit a ‘challenging event’ that raised governance questions: HDFC Bank CEO

HDFC Bank managing director Sashidhar Jagdishan said former chairman Atanu Chakraborty’s sudden resignation 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 published on Saturday, Jagdishan sought to address the fallout arising from Chakraborty’s separation statements.

Jagdishan said that after the exit, HDFC Bank moved quickly to appoint Keki Mistry as interim chairman with the permission of the RBI. He clarified that the board members briefed analysts and the media the day after the resignation and that Chakraborty never raised any issues regarding practices that conflicted with his personal values ​​or morals during the discussions.

The controversy began in March when Chakraborty suddenly quit the presidency. In his resignation letter to the board on March 17, he stated, without elaborating, that “some events and practices within the bank did not align with his personal values ​​and ethics.” Days later, he appeared on national television and implied that the real dispute was the bank’s claim that Credit Suisse had “mis-sold” its perpetual bonds.

“To strengthen the bank’s sound governance standards, the bank’s board has taken the proactive step of appointing external law firms to conduct a review of the statement made by Chakraborty in his resignation letter,” Jagdishan said.

Comprehensive review

Considering that the bank’s American Depository Receipts (ADRs) are listed on the New York Stock Exchange, Jagdishan said the board opted for a comprehensive review, utilizing both local and international advisors. US-based Wilson Sonsini Goodrich & Rosati and Indian firm Wadia Ghandy & Co. will conduct the independent investigation. was brought.

“…the board has also constituted a special committee consisting solely of independent directors to oversee the legal review and ensure appropriate and timely flow of information between the bank and law firms regarding the same,” Jagdishan added.

He added that the review involved analyzing numerous board minutes, corporate communications and internal materials. Jagdishan said legal teams also met with him and all independent directors and a number of senior executives, including the heads of the bank’s control and assurance functions. “The period considered for review was two years before Chakraborty’s resignation,” he noted.

On June 26, the bank informed the stock exchanges that law firms found “no basis” for Chakraborty’s statement.

“In summary, the contemporaneous evidence reviewed was inconsistent with Chakraborty’s statement and the external law firms’ review did not identify any basis for the statement,” the bank said in a statement late the same day. It was also stated that the bank and external law firms repeatedly requested that Chakraborty speak to them as part of the legal review, but ultimately the meeting with Chakraborty did not take place.

‘Unnecessary exercise’

Mint It reported on June 27 that Chakraborty had described the appointment of outside law firms and the resulting report as an “unnecessary exercise” and said he had chosen not to speak because the bank had refused to disclose the terms of reference or the legal basis for such a review.

Chakraborty told Mint He said he had asked the bank for reference terms at least five or six times over the phone on Saturday, but to no avail. “I don’t need a certificate from an outside institution,” he said.

Chakraborty said appointing outside law firms, including an American firm, was just an alignment exercise. “Jamie Dimon [chairman of the board and CEO of JPMorgan Chase & Co.] “I wouldn’t come to an Indian law firm.”

On June 29, the bank appointed former election commissioner (CEC) and financial services secretary Rajiv Kumar as part-time chairman.

Kumar “played a transformative role in its revival”, Jagdishan said on Saturday. [the] country’s banking and financial services sector,” and he and other board members look forward to working closely with him.