Market regulator Securities and Exchange Board of India (Sebi) has taken serious note of the unverified and unsubstantiated allegations in the surprise resignation letter of Atanu Chakraborty, former chairman of HDFC Bank, last Wednesday, and said it will launch a probe to ascertain the reasons behind his departure.
HDFC Bank chief executive Shashidhar Jagdishan has also indicated that the bank may pursue legal remedies against Chakraborty over his claims, adding that it is already in touch with a law firm.
“Sebi will conduct a detailed investigation into the circumstances surrounding the resignation of Atanu Chakraborty as the non-executive chairman of HDFC Bank,” Sebi Chairman Tuhin Kanta Pandey said on Monday. Chakraborty had cited unspecified issues from the past that were “not congruent with his ethics and values” in his resignation letter.
“Independent directors, who hold positions of significant responsibility and accountability within corporate governance frameworks, must act responsibly. They should not make insinuations without proper evidence,” Pandey said, in a strong message aimed at independent directors.
Addressing the media after a board meeting here on Monday evening, Pandey spoke out strongly in the aftermath of Chakraborty’s resignation. His remarks came a day after the Reserve Bank of India backed the bank’s management following the development.
“The resignation had caused concern among investors. Sebi will investigate all aspects of the matter to bring out the facts,” he said.
Since the sudden exit, the bank’s stock has fallen more than 10% from its pre-Wednesday levels, eroding over Rs 1.3 lakh crore in investor wealth.
Pandey emphasised that independent directors are duty-bound to safeguard the interests of minority shareholders and uphold high standards of governance.
“No one is expected to make insinuations without proper evidence and records,” he said, cautioning that vague statements can create unnecessary uncertainty in the market.
Highlighting existing mechanisms, Pandey noted that independent directors have adequate channels to raise concerns, including formally reporting issues to the board and ensuring they are recorded in official minutes.
“Concerns should be addressed through the proper channels and duly recorded in the minutes,” he said, adding, “we cannot keep things vague.”