HDFC Bank shares came under pressure on Thursday after the sudden resignation of part-time chairman Atanu Chakraborty raised fresh governance concerns. The sharp selloff reflected investor unease even as the bank and the Reserve Bank of India (RBI) moved quickly to offer reassurance.
Chakraborty, who had been chairman since 2021, stepped down late Wednesday. In his resignation letter, he referred to ‘certain happenings and practices’ over the past two years that were not in line with his personal values and ethics. He did not cite specific instances. Hours later, he clarified that his exit should not be seen as pointing to any wrongdoing at the bank.
The initial comments, however, rattled sentiment. HDFC Bank shares dropped 5.3%, marking their steepest single-day fall since June 2024. The decline wiped out more than $7 billion in market capitalisation and briefly weighed on broader indices.
In a rare intervention, the RBI issued a statement backing the lender’s governance standards and financial strength. It described HDFC Bank as a systemically important institution with sound fundamentals, a professional board, and a capable management team. The regulator said its supervisory assessment had not flagged any material concerns. It also noted that the bank remained well-capitalised and liquid.
To ensure continuity, the RBI approved the appointment of Keki Mistry as interim chairman for three months starting March 19. Mistry told analysts there were no operational issues. He suggested the situation may have stemmed from relationship issues between the chairman and executive leadership.
Chief executive and managing director Sashidhar Jagdishan also played down the episode. He said large organisations can see ‘errors of omission’ but stressed that there had been no violations. He added that the bank would review any concerns proactively.
Despite the assurances, the absence of clear details has fuelled speculation about internal disagreements. These include issues related to senior appointments and regulatory matters linked to the bank’s Dubai operations. None of these has been officially confirmed.
Analysts say the bank’s financial fundamentals remain strong. However, investor sentiment may stay fragile until there is greater transparency on the circumstances behind Chakraborty’s exit.