Voices over trust, governance, ethics get louder for HDFC Bank

An extension to the next term of HDFC Bank’s CEO Sashi Jagdishan could come under scrutiny in the backdrop of the sudden resignation of former part-time chairman Atanu Chakraborty on Wednesday. Issues relating to ethical concerns, which Chakraborty mentioned in his resignation letter, are always a contentious issue for the regulator, investors and other stakeholders. 

The Reserve Bank of India (RBI) in recent years, has been very strict in not just regulation but also supervision. The central bank is very clear about what it wants bank executives to do and not do.  

Analysts who Fortune India spoke to said that Jagdishan might not want to extend his term, though he categorically said in a media briefing on Thursday that he has had no such re-think on this.  

Jagdishan’s current terms ends on October 26, 2026 and the HDFC Bank Board, including group veteran Keki Mistry have reiterated their unanimous support for Jagdishan. “The Board will discuss and take this forward at the appropriate time,” Mistry told media in a briefing on Thursday. The Nomination and Remuneration Committee (NRC) of the Bank is expected to meet in a month's time before taking the proposal to the Board later. 

The interim, part-time new Chairman Keki Mistry reiterated that there has been no discussion within the Board of any material issue regarding governance. 

The HDFC Bank stock closed 5% down Thursday at ₹800 at the BSE, recovering from a day’s low of ₹770. 

But reading between the lines of the HDFC Bank’s commentary on Thursday suggests that there were some differences in opinion or interpersonal issues between Chakraborty and the top leadership. 

While the HDFC Bank Board continues to dismiss concerns of any power conflict within the Bank, or issues of governance which led to Chakraborty's resignation – “voices around trust, governance and ethics will continue to get louder,” a banking analyst said, on condition of anonymity. 

The Bank’s board maintains that when they asked Chakraborty to spell out his concerns, he declined to offer any details for his decision. 

Don't talk, execute 

Analysts also said that this would be a prudent time for the Bank to stop talk and double down on execution. “Focus on more control and execute ruthlessly,” said another analyst. This is the strategy which its nearest rival ICICI Bank, under Sandeep Bakhshi’s leadership, has been managing well for years. ICICI Bank has shown an improved net interest margin (NIM) of 4.3% in Q3FY26, compared to 3.35% for HDFC Bank. 

The creation of the financial behemoth of HDFC’s merger with parent HDFC Bank since 2023, has been the real challenge. Deposit mobilisation and maintaining funding stability have been real issues.  

The current macro-economic scenario could pose to be another challenge for all banks, including HDFC Bank, if the war in West Asia continues to drag on. Inflationary pressures and questions over asset quality could be fresh concerns which banks might have to deal with.