HDFC Bank senior management backs Keki Mistry to continue as chairman

Mumbai: Following the sudden departure of former part-time chairman Atanu Chakraborty, HDFC Bank’s top management is hopeful that the appointment of Keki Mistry as interim part-time chairman can go beyond the three-month period, managing director and chief executive officer Sashidhar Jagdishan said on Saturday.

While there is support from senior management for HDFC Bank veteran Mistry’s continuation, the final decision rests with the board and the nomination and remuneration committee (NRC), Jagdishan said in the bank’s March quarter earnings call on April 18.

“We all support Mr. Mistry… but… there are some processes we need to complete before it can be tabled for discussion in the NRC and the board,” Jagdishan said, adding that the outcome remained open-ended.

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chakrabortiwho resigned on 18 March, citing “certain happenings and practices within the bank” that were “not in congruence” with his personal values and ethics had prompted questions on oversight and internal controls at the country’s largest private bank.

The Reserve Bank of India (RBI) has approved the appointment of board member and HDFC Group veteran Keki Mistry as interim part-time chairman for three months from March 19, HDFC Bank said in a late night announcement following his resignation. A veteran of the HDFC ecosystem, Mistry’s temporary rise was seen as a stabilizing move.

But with this interim period over, the focus has turned to who will take on the role on a permanent basis.

To strengthen the bank’s sound governance standards, the board had approved the appointment of external law firms to conduct a review of Chakraborty’s resignation letter as it did not mention any incidents or practices that were not in line with Chakraborty’s personal values and ethics. Thereupon Jagdishan said: The legal review is ongoing and the bank will provide a summary of this once the process is complete.

The leadership transition comes at a time when the bank is also managing parallel developments. Addressing the issue regarding the Dubai AT1 bond, the management said that the March 23 order of the National Consumer Disputes Redressal Commission (NCDRC) stated that the complainants were not retail or unsophisticated investors but intended to pursue high-yield, high-risk investment products. The bank also clarified that India did not have jurisdiction for this complaint, suggesting that the issue could be heard in courts abroad.

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The bank’s operating performance continues to show resilience, even as governance questions remain in focus. The bank’s loan growth increased 12% year-on-year in the quarter ending March. ₹3.17 trillion, above the 5.4% growth seen in the previous year. Deposits continued to outpace loans ₹3.91 trillion, up 14% annually.

Asked whether the management remains on track to surpass industry credit growth levels for FY27, Jagdishan refrained from giving any numerical outlook due to uncertainties arising from the ongoing West Asian war but said the positive momentum will continue.

While acknowledging a marginal impact from the geopolitical situation, management said the impact is likely to be limited but some medium, micro and small business segments may face temporary stress.

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On margins, management expects the bank’s net interest margin to remain in the range in the near term. In the 4th quarter, the bank’s net interest rate increased from 3.35% in the previous quarter to 3.38%. The bank’s net interest income increased by 3% on an annual basis and over 1% on a quarterly basis. ₹33,080 crore.

Overall, improvement in asset quality, lower provisions and strong loan growth will reduce lenders’ net profits. ₹19,220 crore, above expectations, up 9% YoY and 3% QoQ ₹19,053 crore PAT estimate Bloomberg.