The legal firms appointed by HDFC Bank to examine allegations made by its former part-time chairman, Atanu Chakraborty, have found no evidence to support his claims. Chakraborty had resigned abruptly on March 18, saying that “certain practices and happenings within the bank are not in congruence with my personal values and ethics”, without explaining what those practices were.
The legal review concludes that official records do not substantiate either his statement or its implications. It notes that Chakraborty had opportunities to place his concerns on record but apparently chose not to do so.
Board minutes, committee papers, and other documented communications contain no evidence supporting the observations he later made in public. Nor did he raise some of the specific issues at board or committee meetings before stepping down. On the material examined, the legal firms found no basis for his allegations.
That should provide considerable relief to HDFC Bank. The controversy had cast a shadow over the country’s second largest lender at a sensitive time, with its succession process under way. The Reserve Bank of India (RBI) had already said it saw no material governance concerns.
The independent legal review reinforces that position and should help restore investor confidence. Chakraborty has since said he wanted “introspection, not a compliance exercise”. That may well have been his intention. But once serious questions about governance enter the public domain, they cannot remain matters of personal interpretation.
They require objective examination. In that sense, the bank was right to commission an external legal review. Equally, the findings should help remove the uncertainty that has surrounded the lender for several months and allow its board to proceed with important decisions, including leadership succession.
Even so, the report should not be treated as the final word on governance at HDFC Bank. It addresses the former chairman’s allegations; it does not automatically settle every other issue that has surfaced.
Most recently, the bank’s own internal audit found that a state-run organisation had been offered a higher rate on deposits than normally permitted, with the difference allegedly compensated through other payments. The bank has maintained that these were established business practices.
Separately, it has in the past faced regulatory action, including the RBI’s 2020 restrictions on new digital banking initiatives and credit card sourcing, while the fallout from the mis-selling of AT1 bonds also dented its reputation. None of these episodes, viewed individually, establishes systemic governance failure. Together, however, they suggest that governance and compliance deserve continued attention rather than complacency.
The distinction is important. A legal review examines whether specific allegations are supported by evidence. Good governance is a broader and continuing obligation. It encompasses board oversight, internal controls, disclosure standards, risk management, and a culture that encourages concerns to be raised before they become controversies.
India’s banking sector has, over the years, learnt that even well-managed institutions are not immune to lapses. The lesson for HDFC Bank is therefore not simply that it has emerged with a clean chit in this instance. It is that governance must remain an ongoing priority.
The legal review should remove a cloud over the bank and restore confidence in its immediate leadership transition. But investor trust is earned over time through consistent adherence to both the letter and the spirit of sound governance. That, ultimately, is the standard against which every leading financial institution should be judged.