HDFC Bank has assured investors that there is no power struggle at the board in a conference call held on Thursday, March 19, a day after Atanu Chakraborty resigned as the Part-time Chairman and Independent Director of the Bank.
Keki Mistry, Non-executive (non-Independent) Director has been appointed as interim Chairman after the exit of Chakraborty. Keki will take charge from March 19, for a period of three months. Speaking to analysts he said, “There is no material concerns, no power struggle at the board, no substantial board minutes would support this.”
Keki Mistry clarifies ‘no operational issue’
Addressing analyst concerns about potential governance or operation concerns, Keki Mistry highlighted that “I would not have taken the responsibility at the age of 71 if the bank had not aligned with the integrity and my ethics. Wish to assure the shareholders that there are no operational issue.”
The HDFC management added that the “Bank operates with robust governance standards. Remain focused on building on to our long legacy. Board members not aware about the issue which Atanu mentioned in the letter.”
Mistry highlighted that board minutes will reflect that there were no points of conflict , nothing substantial, brought up in the board meetings.
Addressing analysts on the conference call, Atanu Chakraborty said “there might be some differences in my value system, but no problems with regulatory perspective.”
HDFC Bank board members met RBI late last evening. “The regulator was supportive and approved Keki Mistry’s appointment as interim Chairman,” HDFC Bank management added.
‘No material concerns’: RBI on HDFC Bank governance after chairman exit
The Reserve Bank of India (RBI) on Thursday in its release also said that it has taken note of the recent developments at HDFC Bank and approved a transition arrangement for the position of the bank’s part-time chairman.
“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,” RBI noted.
Chakraborty cites ethics clash behind HDFC Bank resignation
Earlier in its regulatory filing also the company said that Chakraborty’s resignation effective immediately has no other reasons apart from those mentioned in the letter.
In the letter Chakraborty cited clash with personal ethics and certain bank practices. “Certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal Values and Ethics,” He said.
In the regulatory filing the Bank also said that “Chakraborty’s resignation letter was dated March 17. However, the Bank received the letter on March 18.”
HDFC Bank share price
Following the news, the share price of HDFC bank declined 4.77% in the early trade session. The stock has declined 3.83% in past one week. The ADR of the HDFC Bank also saw a sharp selloff in US trade last evening.