HDFC Bank Chairman steps down, ADR falls 7%; Is everything not well after the merger? Read inside story

HDFC Bank Chairman Atanu Chakraborty Quits: HDFC Bank’s part-time chairman and independent director Atanu Chakraborty suddenly resigned on Wednesday. In a letter to the Chairman of the Governance Committee of the bank, he said that in the last two years, I have seen some incidents and practices within the bank, which are not in accordance with my personal values ​​and ethics. There is no other compelling reason for my resignation other than the reasons mentioned above.

Chakraborty, who joined the board of HDFC Bank in May 2021, further wrote that during my time on the board, important events took place like the merger of the bank with HDFC Limited, which led to the formation of a group under the bank. This strategic initiative made HDFC Bank the second largest bank in the country. However, the benefits of the merger have not yet been fully realized.

Atanu Chakraborty told the reason for resignation

Speaking to NDTV Profit on his resignation, Atanu Chakraborty said that HDFC Bank is an organization which I have managed for 5 years. I am not pointing out any wrongdoing in the bank. My thinking did not match with the organization. So the time had come to separate. According to reports, all was not well with the board regarding the functioning of the bank for some time. However, Chakraborty has thanked the board in his letter.

What did HDFC Bank say in the filing?

Following his resignation, HDFC Bank said in an exchange filing that we confirm that there is no reason for Chakraborty’s resignation other than those stated in the letter. The bank has also informed in the filing that Chakraborty is not a director in any other company. The Board of Directors commends Chakraborty for his contributions to the Bank during his tenure and wishes him every success in his future endeavors.

RBI approval in the name of Keki Mistry

The special thing is that the Reserve Bank of India has approved the appointment of Keki Mistry, the Vice-Chairman of HDFC Limited, as the interim part-time Chairman of HDFC Bank for three months from March 19 before the merger with HDFC Bank. The central bank said in a short statement that the Reserve Bank has taken note of the recent developments in HDFC Bank. The Reserve Bank has approved a transition arrangement as requested for the post of part-time chairman of the bank.

The Reserve Bank of India further said that HDFC Bank is a Domestic Systemically Important Bank (D-SIB), which has good financial position, a professionally run board and a capable management team. Based on our periodic assessments, there are no major concerns on record regarding its functioning or governance.

Professional background of Atanu Chakraborty

Chakraborty, a retired IAS officer of Gujarat cadre, has held several government positions such as Secretary in the Ministry of Finance (Department of Economic Affairs) during FY 2019-20. In his role as Secretary (DEA), he coordinated economic policy formulation for all ministries/departments. He also managed the entire process of budget making, including passing it in Parliament.

Earlier, Chakraborty served as Director and later as Joint Secretary in the Ministry of Finance (Department of Expenditure). During this period (2002–2007), he evaluated projects in the infrastructure sector. In addition, he also took into account government subsidies. Chakraborty also played an important role in updating and modernizing the government’s financial and procurement rules.

Important role in Gujarat government also

Apart from this, Chakraborty also held various roles in the Government of Gujarat, including heading the Finance Department as Secretary. He oversaw private sector investment legislation in the state. He worked at the grassroots level in both public governance and development areas in Gujarat.

Impact on HDFC Bank shares

Shares of HDFC Bank Ltd, which is one of the largest constituents of Nifty 50 and Nifty Bank indices, will be in focus on Thursday following Chakraborty’s resignation. In response to these developments, HDFC Bank’s US-listed shares, or ADRs (American Depository Receipts), fell more than 7 per cent overnight, before rising 1 per cent in extended trading. HDFC Bank shares fell by 4.73 percent in Indian markets. At 9:38 am, its share price dropped to Rs 800.40 from the previous close of Rs 842.95.

However, brokerage firm JP Morgan has maintained ‘neutral’ rating on HDFC Bank with a price target of Rs 1,090. Ratings maintained. The brokerage wrote that we believe the stock may face weakness following the resignation announcement, which will be further impacted by the soft macro backdrop amid geopolitical uncertainties.

Also read: CBI’s interrogation of Anil Ambani: Investigation intensified in SBI’s Rs 2929 crore bank fraud case

The country’s second largest bank

The special thing is that hdfc bank shares Trading near its 52-week low of Rs 812, it closed at Rs 842, down 0.4 per cent on Wednesday. The stock is down 8 percent in the last one month. HDFC Bank is the second largest bank with a market capitalization of Rs 12.97 lakh crore.