HDFC Bank on Tuesday said that it has appointed external law firms to review the resignation of former part-time chairman Atanu Chakraborty, who stepped down last week over ethical concerns.
The move aimed to reinforce the bank’s strong governance standards, the country’s largest private lender said.
“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 lender said in a media statement.
The bank has engaged with domestic and international law firms, while not mentioning the names. The law firms have been advised to provide their report on the same within a reasonable period of time, the bank said. The bank’s shares climbed 2.8% to Rs 764.90 following the statement, snapping a four-day losing streak. Shares dropped as much as 12% following the resignation.
Chakraborty, a retired bureaucrat, stepped down from his position on March 18, citing differences with the lender, which he said were “not in congruence with his personal values and ethics.” In his resignation letter, Chakraborty, who joined the board of HDFC Bank in May 2021, pointed to “certain happening and practices within the bank” without specifying what they were.
“We wish to inform you that, Mr. Chakraborty did not mention any happenings and practices which were not in congruence with his personal values and ethics,” the bank said in an exchange filing on Tuesday.
After the chairman’s abrupt exit, the Reserve Bank of India (RBI) approved veteran HDFC Group executive Keki Mistry as interim non-executive chairman for three months. A day post-resignation, the regulator backed the lender, confirming no material concerns regarding its conduct or governance.
Regarding the incident, Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey on Monday told media that insinuations without evidence should not be made and independent directors of companies are required to report concerns about unethical behavior, actual or suspected fraud, or violation of the company’s code of conduct or ethics policies.