India’s largest private lender said on Thursday the abrupt exit of its chairman could be due to a rift between him and the management team, adding there were no material issues at the bank.
Shares of HDFC Bank fell as much as 8.7% on Thursday after its non-executive Chairman Atanu Chakraborty resigned, citing differences over “values and ethics”, which raised governance concerns among some investors.
India’s central bank in a statement said that HDFC Bank was a domestic systemically important bank with sound financials, a professionally run board and competent management team.
Based on its periodic assessments, there were “no material concerns on record as regards its conduct or governance,” the Reserve Bank of India said.
The RBI has approved the appointment of former long-time HDFC Group executive Keki Mistry as an interim non-executive chairman for three months. Mistry told reporters and analysts on a call there had been no discussion regarding governance within the board.
He added that he was not aware of the issues raised by Chakraborty in his resignation letter that the bank received on Wednesday and said there were “no power struggles within the bank”.
“There could have been a relationship issue between Chakraborty and management. That may have manifested over a period of time,” Mistry said.
“Chakraborty’s resignation has nothing to do with operational profitability of bank,” he added.
Chakraborty could not be reached for comment by phone.
“Certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal values and ethics,” Chakraborty said in his resignation letter published on India’s stock exchanges, without elaborating.
SYSTEMICALLY IMPORTANT BANK
HDFC Bank had a balance sheet of 40.89 trillion Indian rupees ($438.32 billion) as of December 2025 and more than 120 million customers.
The bank holds a little more than a tenth of India’s banking system deposits, making its stability key to the South Asian economy. It is designated by the central bank as a systemically important bank, a tag assigned to lenders considered to be too big to fail and required to hold additional capital.
Following the turmoil at India’s largest private sector lender, Macquarie removed HDFC Bank from its marquee buy list.
“Near-term underperformance may remain. While fundamentals remain strong with good ROA (returns on assets) , at this point in time governance concerns will weigh down heavily on the stock. Investors would want more comfort from the board,” Suresh Ganapathy, an analyst at Macquarie, said in a note published on Thursday.
He added that uncertainty around current chief’s reappointment will also weigh on the stock.
The shares, which at the day’s low saw their steepest drop in more than two years, were the top drag on the benchmark Nifty 50 index which fell 2.3%.
As of 11:50 a.m. IST (0620 GMT), the bank’s shares had pared some losses to trade 4% lower.
Chakraborty, a former bureaucrat, was appointed as HDFC Bank’s chairman in April 2021 for a three-year term and reappointed in 2024 through May 2027.
“While governance standards have historically been strong for the bank, the current episode raises concerns about aspects that we may have limited insights, but could be material from a stock multiple perspective,” said Kotak Institutional Equities in a note.
Reporting by Gopika Gopakumar in Mumbai, Chandini Monnappa, Urvi Dugar and Bharath Rajeswaran,in Bengaluru; Writing by Jayshree P Upadhyay; Editing by Sonia Cheema, Mrigank Dhaniwala, Jamie Freed and Lincoln Feast
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