The Securities and Exchange Board of India chairman Tuhin Kanta Pandey on Monday called for greater transparency and accountability of independent directors while commenting on the sudden resignation of HDFC Bank’s former part-time chairman and independent director Atanu Chakraborty last week.

“The Reserve Bank of India has already taken action. Sebi has outlined the code for conduct for independent directors. If they are concerned about the working of a company, they should insist that their concerns are recorded,” Pandey told media after the Sebi board meeting on Monday.

HDFC Bank has been under a cloud involving governance crisis after Chakraborty’s exit, where in his resignation letter he had cited ethical concerns relating to certain happenings in the bank which did not match his personal values and ethics.

The HDFC Bank stock has fallen nearly 20% in the past one month and nearly 12% since his resignation on March 18.

Pandey was non-committal on whether Sebi would take any specific action against HDFC Bank, but added that comments should not be made “without significant substance.”

The RBI, hastily, gave a clean chit to HDFC Bank, just hours after the Bank’s board members met the banking regulator to appraise them of the developments. It them approved the appointment of HDFC Group veteran Keki Mistry as the part0time chairman for a three-month term, starting March 19.

Norms announced to ease winding up of AIFs

At the board meeting, Sebi announced norms to ease the finding up of Alternative Investment Funds (AIFs), through its existing regulations. As per the revision, AIFs will now be allowed to retain liquidation proceeds of portfolio post completion of its tenure. Sebi has also allowed approval for a framework to tag certain AIFs as 'inoperative funds' with lighter compliance requirements till surrender of their registration certificate.

To date, AIFs were required to distribute all proceeds in the fund’s life and achieve a zero bank account balance before surrendering their certificate of registration.

The board also approved a proposal to permit net settlement of funds for transactions done by foreign portfolio investors (FPIs) in cash market. All this while FPIs settled their transactions with custodians on a gross basis, which resulted in higher costs for them, including funding costs and foreign exchange slippages.

Sebi decided to allow this net settlement for outright transactions done by FPIs in the cash market, i.e., transactions in which there is either purchase or sale transactions, but not both, in a security in a settlement cycle.

Pandey termed these measures to “optimize regulations” and “balancing norms for better efficiency.”