HDFC Bank on Tuesday said that it has appointed law firms to investigate and submit a report on the reasons cited by its former part-time Chairman Atanu Chakraborty in his resignation letter last week.
The bank said the appointment of external law firms - Trilegal and Wadia Ghandy & Co - is a measure taken to independently look at the aspects mentioned in the letter to ensure an objective and fact-based assessment.
“The appointment of external law firms is a proactive measure taken by the bank to independently look at the aspects mentioned in the (resignation) letter of (Chakraborty) so as to ensure an objective and fact-based assessment,” the bank said in a statement on Tuesday
This step is keeping in view to constantly benchmark with the highest governance standards that the bank has practiced over decades, the statement added. Chakraborty in his resignation letter had cited certain issues in the past two years which are not in congruence with his “values and ethics.”
Despite the 12 member Board that met over his resignation repeatedly requesting him to explain the issues that he refused to budge, saying there were nothing more to add.
Then the Board, which appointed veteran banker Keki Mistry as the interim chairman, asked him to retract those words and redraft a new resignation letter, which was also turned down by the former finance secretary. Earlier, the RBI had supported the bank management on the matter.
Sebi chairman Tuhin Kanta Pandey had asked independence directors should act responsibly. Addressing the press after a Board meeting on Monday, the Sebi chairman said the regulator will probe into the matter and also the minutes of the previous Board meetings of the bank, apart from Chakraborty’s unsubstantiated allegations.
“Sebi will conduct a detailed investigation into the circumstances surrounding the resignation of Chakraborty last Wednesday, citing unspecified issues,” Pandey said.
Asking independent directors to behave more responsibly, the chairman said “those holding positions of significant responsibility and accountability within corporate governance frameworks, must act responsibly and that they should not make insinuations without proper evidence.”
“The resignation had caused concern among investors. Sebi will investigate all aspects of the matter to bring out the facts,” he said.
Since the shocking resignation the bank stock, which is the most valuable bank stock and the second largest in terms of market value has lost more than 10% of its pre-Wednesday value, ripping investors off over Rs 1.3 trillion.
Pandey emphasised that “independent directors must act responsibly and avoid making unsubstantiated claims and they are duty bound to safeguard minority shareholders”.
“Independent directors are expected to act responsibly,” Pandey said, underlining the importance of their fiduciary duties.
“No one is expected to make insinuations without proper evidence and records,” the chairman said, adding further that “vague statements can create unnecessary uncertainty in the market.”