The resignation that plummeted the market capitalization of HDFC Bank was due to a rift between two people. The resignation of HDFC Bank’s former chairman, Atanu Chakraborty, last week was due to a power struggle with chief executive Sashidhar Jagdishan, the Financial Times reported on Friday, citing sources.
Chakraborty had opposed extending Jagdishan’s tenure, but a majority of the board favoured it, the report said.
The differences had been building for months, revolved around strategy, governance matters and the CEO’s upcoming reappointment. Chakraborty, who served as non-executive chairman since 2021, stepped down abruptly last week, citing “ethical differences” in his resignation letter. According to the FT report, the underlying dispute went beyond compliance issues, with insiders pointing to a deeper clash over leadership style, strategy and control.
The resignation of Atanu Chakraborty has created a chaos in the banking industry and has raised several questions over HDFC Bank. He said that some developments and practices in the bank over the last two years did not match his personal values and ethics. This statement took internet by storm and public started demanding answer from HDFC Bank.
Chakraborty is a retired IAS officer from the Gujarat cadre. He has held several important government positions, including Secretary in the Ministry of Finance (Department of Economic Affairs) during 2019–20. In this role, he coordinated economic policymaking and handled the Union Budget process. He also worked in the Department of Expenditure and was involved in infrastructure project evaluation and subsidy management.
Meanwhile, the CEO of HDFC Bank said – The bank supports a fair and independent review process. He added that the bank will hold several board meetings to review past decisions and identify any gaps. He stated that if there are operational issues, the bank will improve systems and controls. If there are conduct-related issues, the bank will take strict action.
HDFC Bank has initiated a legal review into the circumstances surrounding Chakraborty’s exit. The bank has appointed law firms, including Wadia Ghandy and Trilegal, along with an international firm, to examine the issue, people familiar with the matter told ET.
The review will involve scrutiny of board proceedings over the past two years, including recordings, minutes and agendas, to determine whether any concerns related to governance or ethical practices were raised during Chakraborty’s tenure. It will also cover whistleblower complaints escalated to the board and assess how they were handled.
More details will be released soon.
