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On March 19, the shares of HDFC Bank fell sharply after the sudden resignation of its part-time chairman, Atanu Chakraborty, who cited differences over “values and ethics.” During the day, the stock dropped as much as 8.7%, which has been its steepest decline since January of 2024. Before that, it was trading at 5% lower at ₹802.1 in the morning session.
The impact of this was felt across the broader banking sector as well, as the Bank Nifty index slipped nearly 3%. Even other major lenders like Axis Bank and ICICI Bank also saw a decline of over 2-3%, which reflected the unease among the investors.
The resignation letter from Chakraborty did not specifically point towards misconduct, but it did mention certain practices within the bank over the past two years that did not align with his personal values. This lack of detail has added to market uncertainty, and many analysts are now warning that even perception alone can hurt investor confidence.
Following his exit, the bank quickly appointed long-term insider Keki Mistry as interim part-time chairman for three months. This move is approved by the Reserve Bank of India (RBI). Mistry emphasised that he accepted the role only because it aligns with his own principles and now aims to reassure stakeholders during this transition.
Market experts believe the RBI’s swift approval of Mistry’s appointment suggests that the regulator is comfortable with the situation. However, some analysts suggest that the regulator is comfortable with the situation. However, some analysts caution that governance concerns could linger unless the bank takes clear and credible steps to address them.
The development comes at a crucial time for HDFC Bank, which recently completed its massive merger with HDFC Ltd in a $40 billion deal. Chakraborty himself noted that the full benefits of this merger are yet to materialise.
For now, the sentiment of investors has remained cautious, with many watching closely for further clarity from the bank’s leadership and regulators in the coming days.
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