SEBI investigation HDFC Bank: Here is the latest twist in the HDFC Bank saga. A Reuters report indicates that the markets regulator, SEBI, has begun a preliminary review of the resignation letter of former HDFC Bank chairman Atanu Chakraborty. As per the international news agency, SEBI is reviewing it for possible violations of rules governing directors of listed companies.
HDFC Bank appointed external law firms
Meanwhile, HDFC Bank said on Tuesday, March 24, detailed in a media statement, that it had appointed external law firms to independently assess the concerns raised in the resignation letter.
“Appointment of external law firms is a proactive measure taken by the Bank to independently look at the aspects mentioned in the letter so as to ensure an objective and fact-based assessment. This step is keeping in view to constantly benchmark with the highest governance standards that the Bank has practiced over decades,” the largest private lender shared in a press statement.
Chakraborty told Reuters the firms had not contacted him. He has also told Reuters, as stated in the report, that he was not aware of any examination by the regulator. Financialexpress.com could not verify the news independently. However, we have reached out to HDFC Bank and will update if we hear from them.
In his resignation letter, Chakraborty had cited “certain happenings and practices within the bank” that he said were “not in congruence” with his personal values and ethics. Though he did not elaborate the exact details, the letter triggered a massive slide in the HDFC Bank share price the following day and wiped $16.3 billion in market value over three sessions. The bank’s shares have declined over 13% in the last 1 month.
SEBI examining Chakraborty, other HDFC Bank directors
The Reuters report quoted sources and detailed that a department of the Securities and Exchange Board of India (SEBI), that oversees corporate disclosures and governance, is examining the former chairman and other directors for alleged failures to do their fiduciary duties.
Reuters quoted sources and stated that “(The) examination is to verify claims made in the resignation letter and whether other directors were aware of any material information and did not document them.”
The Reuters report added that email queries sent to HDFC Bank and SEBI were not immediately answered.
The Reserve Bank of India, the primary regulator in the case, had already issued a statement last week reiterating that it had found “no material concerns on record as regards its (bank’s) conduct or governance”.
Earlier this week, SEBI Chairman Tuhin Kanta Pandey, without commenting on individual cases, said independent directors must follow the code of conduct set out in regulations. “No one can make insinuations without proper evidence being recorded,” Pandey said. “Any such comments do have an impact on minority shareholders …. Independent directors have to be responsible in terms of what they say.”