HDFC Bank has initiated a thorough independent review by external law firms to address the ethical concerns raised by its former Chairman, Atanu Chakraborty, whose abrupt resignation has prompted a proactive move to uphold the bank’s stringent governance standards.
Photograph: Shailesh Andrade/Reuters
Key Points
- HDFC Bank has appointed external law firms to conduct an independent review into issues raised by former Chairman Atanu Chakraborty’s resignation.
- Atanu Chakraborty resigned as HDFC Bank chairman, effective March 18, citing ‘certain happenings and practices within the bank’ that were not congruent with his personal values and ethics.
- The independent review is a proactive measure by HDFC Bank to ensure an objective, fact-based assessment and uphold its high governance standards.
- Chakraborty’s resignation marks the first time a part-time chairman of HDFC Bank has left mid-term, raising questions about the bank’s internal functioning.
- His departure occurred during the critical integration phase of HDFC Ltd with HDFC Bank, which created a significant financial institution.
Following the abrupt resignation of Chairman Atanu Chakraborty citing ethical concerns, HDFC Bank has initiated an independent review by external law firms to ensure transparency and uphold its governance standards.
Why HDFC Bank Appointed External Law Firms
The bank’s spokesperson said the appointment of external law firms is a proactive measure taken by the bank to independently look at the aspects mentioned in the letter so as to ensure an objective and fact-based assessment.
This step is aimed at constantly benchmarking against the highest governance standards that the bank has practiced over decades, the spokesperson added. It is to be noted that Atanu Chakraborty abruptly resigned as chairman of the country’s second biggest lender HDFC Bank citing ethical concerns effective March 18. This is the first time that the part-time chairman of HDFC Bank left mid-way raising concerns over its functioning.
Atanu Chakraborty’s Exit Letter
“Certain happenings and practices within the bank, that I have observed over the last two years, are not in congruence with my personal Values and Ethics. This is the basis of my aforementioned decision,” he said in his resignation letter dated March 17.
In a letter addressed to Chairman of Governance, Nomination, Remuneration Committee H K Bhanwala, Chakraborty said that “there are no other material reasons for my resignation other than those stated above.”
Who is Atanu Chakraborty?
It is to be noted that Chakraborty was appointed part-time chairman effective May 5, 2021 almost a year after retirement as Economic Affairs Secretary. His term was extended for another three years in 2024 till May 4, 2027.
Chakraborty, a 1985 batch IAS officer of Gujarat cadre, retired as Secretary of Department of Economic Affairs in April 2020. Prior to that, he was Secretary of the Department of Investment and Public Asset Management (DIPAM). Both departments come under the Finance Ministry.
Chakraborty became chairman during the reverse merger process of the bank with the parent entity HDFC Ltd, a leading mortgage firm in the country. The merger of HDFC Ltd. with HDFC Bank became effective on July 1, 2023, creating a financial behemoth with a combined balance sheet of over Rs 18 lakh crore.
