When former top bureaucrat of the Union finance ministry Atanu Chakraborty resigned as the non-executive chairman of HDFC Bank on Wednesday, markets bought into the message of his resignation letter with a momentous fall. In two days after his mention of “values and ethics” in the letter, the bank lost around Rs 1 lakh crore in its market value. The fall could either signify Chakraborty’s stature as a bureaucrat or a structural problem in the country’s second largest lender, or both.
The jury is still out on what caused Chakraborty’s outburst. His succinct—but sharply worded—resignation letter has stumped observers. Was it a case of dissent at the top or a deliberate push towards cleaning the labyrinth of corporate decision making, where mal-intent could lie latent for years?
Chakraborty took a step back as the controversy raged. He downplayed the content of his own letter, calling the episode “routine” and pulling back from the insinuations of ethical lapses. However, insiders argue, Chakraborty is no novice corporate leader who is learning the tricks of the trade. He was a career bureaucrat with experience at public sector undertakings and the Reserve Bank of India (RBI).
People who have watched him from Gujarat days know that such a career profile cannot succumb to behavioural impulses. What made the charge stick and lent weight to Chakraborty’s opinion of the top brass at HDFC Bank was the bank’s decision to sack three senior executives over a bond mis-selling case.
Chakraborty had joined HDFC Bank in 2021 after completing his stint as the Union finance secretary. He was at the top of the game in the government then and went straight to the top of the corporate leadership at the bank. Observers say the transition could have caused discomfort to some interests at the bank.
He had been a secretary of economic affairs, which put him on the central board of the RBI and gave him direct exposure to the regulatory oversight of the banking system.
In the 35 years he gave to the Indian Administrative Service, he was tasked to intervene in petroleum, fertilisers, infrastructure, and finance sectors at the level of policy and regulation. As a 1985-batch Gujarat cadre officer, he spent nearly three decades in the state before moving to the Union government—first to the petroleum ministry in 2016 and later to the finance ministry in 2018.
With time, he built a reputation of being a capable administrator with a foot in the corridors of power in New Delhi. This profile and network strength equipped him with the moral and legal compass to spot intentional or unintended malfunctioning of any system.
Chakraborty’s experience and exposure made his placement in the board of HDFC Bank a relevant fit at a time when it was contemplating merger with HDFC Ltd, which was billed as the one of the largest mergers in India’s corporate history. Here was a man with a long stint as a policymaker and regulator, who needed to help a corporate behemoth navigate the world of government oversight.
The merger was completed in 2023, and, in 2024, Chakraborty was given a three-year extension. However, it is not easy to fit in a corporate legacy. Chakraborty, they say, may not have grasped the board dynamics and placed an exaggerated sense of importance to his mandate. “He came with a certain perception that his role was to fix what he saw as wrong,” said one person familiar with the matter.
HDFC Bank’s leadership has long prided itself on a culture of professionalism and continuity, and any attempt to disrupt that equilibrium was bound to create friction. Even Keki Mistry, who stepped in as interim chairman, has hinted at possible differences at the top. For now, Chakraborty has largely chosen silence. Whether he substantiates his allegations or lets the episode fade into the background remains to be seen.