AIBEA writes to FM Sitharaman seeking probe into HDFC Bank after chairman’s resignation

The All India Bank Employees' Association has written to Finance Minister Nirmala Sitharaman , seeking an inquiry into the affairs at HDFC Bank after the surprise resignation of its non-executive chairman Atanu Chakraborty last month.

The AIBEA said there is a need for HDFC Bank's 120 million customers, shareholders and also the general public to feel reassured, and hence sought Sitharaman's intervention in the matter.

In a letter written on March 31 and shared with the media on Thursday, the AIBEA said the largest private sector lender, classified as a domestically systemically important bank by the RBI, faces developments that raise serious questions about governance standards, regulatory oversight, and systemic stability."

"The explicit mention of ethical incongruence by an Independent Director is highly unusual and warrants immediate investigation," the letter, a copy of which was reviewed by PTI, said.

Chakraborty, a retired bureaucrat, had quit the bank on March 18, and flagged issues of ethics and values, which raised more concerns about governance practices at HDFC Bank.

AIBEA said all banks must be answerable to the public and follow the highest standards of transparency and accountability.

AIBEA said the government must do a comprehensive inquiry into the matter, assess governance, compliance, and risk management practices and initiate an independent probe by the Central Bureau of Investigation or Central Vigilance Commissioner if warranted.

All the findings must be disclosed publicly to ensure transparency and depositor confidence, and appropriate committees of the Parliament must also examine the matter, the letter said.

Chakraborty did not cite specific reasons in his resignation letter, and the bank's executives and some fellow board members claimed he did not divulge any specifics even after they were sought, leading them to term the developments as "baffling."

In a media interview two days ago, Chakraborty had said that alleged mis-selling of AT-1 bonds by its Dubai unit and underperformance were among the factors that led him to resign.

(Except for the headline, Fortune India has not edited the content of this PTI report.)