HDFC Bank on Thursday sought to allay investor concerns following the sudden resignation of its part-time chairman, Atanu Chakraborty. Senior board member Keki Mistry asserted that there were no governance lapses or contentious issues at the board level.
Speaking during the bank’s earnings conference call, Mistry said the board and management remain “completely cohesive and united,” and that strong oversight mechanisms are in place across committees such as audit, risk policy, and nomination and remuneration.
“There has been an extreme amount of confidence provided to the respective independent committees, which are the fulcrum in terms of governance and controls,” he said, adding that these committees are led by independent directors with “strong vintage, credibility, experience, and stature.”
His remarks come amid investor concerns after Chakraborty stepped down with immediate effect, citing certain developments at the bank over the past two years that were not aligned with his personal values and ethics.
Responding to analyst queries on the reasons behind the resignation, Mistry said there had “never been any kind of discussion on any matter that is contentious in terms of governance” at the board level. Any minor issues that arose were addressed in a timely and appropriate manner, he added.
“What caused that letter to be sent today is something which, to my mind, really defies logic,” Mistry said, indicating that the board was not aware of any serious underlying issue that could have triggered the resignation.
When pressed further by analysts seeking clarity, he reiterated that the bank has a “very strong risk management process and a very strong audit process,” underscoring that a systemically important institution like HDFC Bank is subject to continuous regulatory supervision.
Mistry also emphasised that the board committees oversee all aspects of operations, including risk management, compliance, and audit, ensuring that any issues are addressed within clear timelines in a “normal and calm manner.”
The management’s response, however, may do little to fully quell investor unease, with analysts flagging the lack of specific disclosures regarding the circumstances leading to the chairman’s exit. Chakraborty’s resignation has sparked debate in market circles, particularly given his stature and the unusual nature of the concerns cited in his letter.
HDFC Bank is the second largest bank (the largest among private sector banks) in India in terms of both asset size and market capitalisation. Its balance sheet stands at nearly Rs 41 lakh crore, underscoring its systemic importance. The deposit base of about Rs 28.6 lakh crore continues to grow at a steady double-digit pace, supported by a strong and granular liability franchise across CASA and term deposits, while the loan book at roughly Rs 28.4 lakh crore reflects balanced growth across retail, small and mid-market, and corporate segments.
The bank’s operational reach is equally extensive, with a network of over 9,600 branches and a customer base exceeding 90 million, enabling deep penetration across metros as well as semi-urban and rural markets. Its business model remains anchored in retail, which accounts for just over half of assets under management, providing diversification and stability to earnings.
Despite its scale, asset quality remains stable, with gross NPAs at around 1.24%, highlighting prudent risk management. The bank is also well-capitalised, with a capital adequacy ratio close to 20%, giving it sufficient headroom to sustain growth.