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A governance review at HDFC Bank has not found any major lapses, according to people familiar with the matter. The exercise was initiated after former chairman Atanu Chakraborty stepped down, citing differences between his personal values and the bank’s practices. The findings are expected to support the reappointment of CEO Sashidhar Jagdishan, whose term ends in October. The development may bring stability after recent market volatility and regulatory scrutiny, particularly following the bank’s merger with HDFC Ltd.
A governance review conducted for HDFC Bank is expected to conclude that no major irregularities were found, based on inputs from people directly aware of the process. The review was carried out by law firms Trilegal and Wadia Ghandy & Co, and its findings are likely to be submitted to the bank’s board in the coming weeks before being shared with the Reserve Bank of India. Advertisement
The exercise was initiated after former chairman Atanu Chakraborty resigned in March, stating that there was an incongruence between his personal values and the bank’s practices. He did not provide further details at the time, and has since declined to comment on queries regarding the matter.
The review process involved examining board meeting records, including minutes and video recordings from the past three years. According to sources, any issues raised at the board level were addressed in line with prescribed processes. The findings have not been made public yet, but they are expected to provide clarity on governance standards followed by the bank during this period.
Market reaction showed a clear shift in sentiment. Shares of HDFC Bank moved higher following the report, rising up to 3.1% to INR 796.95 during trading before settling slightly lower with gains of around 2.9%. Prior to the report, the stock was already trading about 1.8% higher, indicating that investor confidence improved as clarity emerged around the review.
This comes after a sharp correction in the stock following the chairman’s resignation, when shares had fallen by 13.81%, wiping out nearly USD 16 billion in market value. The situation had prompted the Reserve Bank of India to issue a rare reassurance, stating that there were no material concerns regarding the bank’s governance or conduct based on its periodic assessments.
The episode had also delayed a decision on the reappointment of CEO Sashidhar Jagdishan, whose current term is set to end in October. The bank is now expected to move forward with proposing his reappointment once the review report is formally submitted. As per sources familiar with regulatory thinking, the central bank does not see any issues that would prevent his continuation, subject to alignment with the review findings.
The developments come at a time when the bank has been under pressure following its USD 40 billion merger with HDFC Ltd in 2023. Since the merger, the stock has declined around 5%, underperforming peers such as ICICI Bank, which has gained about 33%, and the benchmark Nifty 50, which has risen roughly 24% over the same period.
With a customer base of over 120 million and accounting for slightly more than a tenth of the country’s banking deposits, HDFC Bank remains systemically important to India’s financial system. Its ownership structure, with a majority held by foreign institutional investors, also makes governance clarity critical for global investor confidence.
External views have suggested that the chairman’s exit may not have been linked to deeper governance risks. InGovern Research Advisory Services indicated in a recent note that the resignation appeared to be driven more by individual differences rather than concerns impacting shareholder value.
Source Reuters
5th Jun, 2025
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