HDFC Bank to hire external law firms for review of part-time chairman Atanu Chakraborty's resignation letter

Days after Atanu Chakraborty resigned as the part-time chairman and independent director of HDFC Bank citing differences over ethics and value, the board of the country's largest private sector lender has approved the appointment of external law firms to conduct a review regarding his resignation letter.

Chakraborty, a former economic affairs secretary, had resigned on March 18 as the part-time chairman of HDFC Bank. 

“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. He also stated that that there were no other material reasons for his resignation.

The sudden resignation and in particular the line around value and ethics mentioned in the resignation letter, sent shockwaves in the financial market. The stock slumped following the news, at a time the broader stock market was already under pressure due to the West Asia conflict. HDFC Bank shares are down over 11 per cent in the past five days. 

"To reinforce the robust governance standards of the bank, the board of directors of the bank, took a proactive step and approved the appointment of external law firms (domestic and international), to conduct review regarding Mr Chakraborty’s resignation letter. The said law firms have been advised to provide their report on the same within a reasonable period of time," HDFC Bank said in a statement on Tuesday. 

The lender pointed that Chakraborty did not mention any happenings and practices, which were not in congruence with his personal values and ethics. Following Chakraborty's resignation, the bank appointed veteran banker and former Housing Development Finance Corp vice-chairman Keki Mistry as the interim-chairman. 

Mistry too had stated that there were no material matters and that there was no specific operational or other issues that had been highlighted. 

On Monday evening Tuhin Kanta Pandey, the chairman of market regulator Securities and Exchange Board of India, urged that independent directors should act responsibly as the comments can have an impact on minority shareholders. 

"Nobody is expected to make any insinuations without actually proper evidence in recording," he had stressed in an interaction with reporters following the regulator's board meeting.