The board of HDFC Bank, including group veteran and interim part-time chairman Keki Mistry, sought to allay investor concerns on Thursday after the former chairman Atanu Chakraborty resigned with immediate effect a few hours earlier, citing ethical concerns.  

Mistry in a meeting with analysts on Thursday declined knowledge of why Chakraborty resigned. “At the board level, there has never been any discussion on any matter which was contentious in terms of governance. If there were minor issues here and there, they were tackled appropriately. What caused that letter to be sent yesterday defies logic,” Mistry told analysts.  

This was in response to an analyst concern on the fact that Chakraborty was the former chairman, and not just an employee, which merited the HDFC Bank’s board to have taken the matter seriously. Chakraborty, in his letter on March 17 to the board said he was resigning due to “certain happenings and practices within the bank” that were “not in congruence” with his personal values and ethics. 

Two whole time directors and independent directors had met the Reserve Bank of India to appraise them of Chakraborty’s decision, after which Mistry was appointed as the interim part-time chairman, by the RBI. Mistry reiterated that “At the age of 71, I would not take on the responsibility for 3 months, if the system, processes and governance practices at the bank, did not align with my principles and level of integrity.” 

Mistry added earlier that” There was no specific happening or practice that were brought to our attention. I wish to assure all stakeholders that there are no material issues on hand, which need addressing. There were no operational matters or issues which were highlighted.” 

The HDFC Bank board has approved Chakraborty’s resignation. 

Investors reacted nervously to the developments, with the HDFC Bank stock fell to an intraday low of ₹770, down over 8%, before recovering to ₹803 levels, but still down 4.7% over the previous close. 

Mistry, who is currently in New Delhi on “a personal visit” added that “In no board meeting was there any differences of opinion between board members and the Bank’s minutes will reflect this. There was no power struggle, as expressed by the media and the entire bank continues to operate as a cohesive unit.” 

In a note issued earlier in the day, the RBI noted that HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financials, professionally run board and competent management team. “ 

“Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance. The bank remains well-capitalized and the financial position of the bank remains satisfactory with sufficient liquidity,” the regulator said.