Atanu Chakraborty’s resignation as part-time chairman of HDFC Bank should have been accompanied by a far more detailed explanation. Simply stating that “certain practices and happenings within the bank are not in congruence with my personal values and ethics” is inadequate. For an institution of HDFC Bank’s size and systemic importance, such ambiguity is not just unsatisfactory—it risks being seen as irresponsible, leaving investors and depositors to read between the lines.
To its credit, the Reserve Bank of India (RBI) has moved swiftly to steady sentiment, approving the appointment of an interim part-time chairman for three months. Its assertion that the bank’s financials remain sound and that there are no material concerns regarding governance or conduct is reassuring. Given the RBI’s overarching supervisory role, its word carries weight. In effectively endorsing the bank’s credentials, the regulator has provided an important measure of stability.
Need for Granular Clarity
Yet, regulatory reassurance cannot substitute for clarity. It would still help to know the precise nature of Chakraborty’s concerns. If the bank’s practices were indeed troubling enough to prompt his exit, the issue cannot be left at the level of a cryptic personal statement. Equally, Chakraborty himself has said he is “not pointing out any wrongdoing” at the bank. That only deepens the puzzle—what exactly triggered such a strong personal response? Chakraborty took over as chairman in May 2021 and was into his second term, due to end next year. By this stage, he would have been fully conversant with the bank’s operations. That makes the timing of his exit—and the absence of specifics—all the more surprising. If his discomfort built over time, was it discussed within the board? Were concerns formally recorded, debated, or addressed?
Boardroom Opaque
On this, the signals are not encouraging. Interim chairman Keki Mistry indicated in an analyst call that the board was not aware of the specifics of Chakraborty’s concerns, and that he had declined to elaborate despite requests. Mistry also maintained that there are no material or operational issues at the bank. While such assurances are expected, they are unlikely, on their own, to settle the matter.
This is not a lunch-time squabble among a few senior executives that can be brushed aside with polite statements. It concerns the leadership of one of India’s largest private sector banks, and both sides—the outgoing chairman and the board—should have been far more proactive in communicating with stakeholders. Silence, in such circumstances, only erodes confidence. This is where the bank itself must step up. It cannot rely solely on regulatory comfort or broad assertions that all is well. Given the stature of the institution and the nature of the exit, HDFC Bank should proactively disclose more. Transparency, in this case, is not a compliance exercise but a reputational imperative.
Until there is greater clarity, questions around governance will inevitably persist—and that is not in the interest of the bank or its shareholders. Speculation, ranging from differences over oversight to perceived power frictions, will fill the vacuum left by silence. That is precisely what credible institutions seek to avoid. The RBI, for its part, may still need to engage more deeply—seeking clarity from both the bank and Chakraborty on what lay behind the reference to “practices and happenings”. Whether the issue relates to risk management, governance processes, business strategy, or something more intangible, only a fuller examination can put the matter to rest.