• Corporate & Business
• 2 min read

No clarity on HDFC Bank chairman's exit; bank 'baffled', RBI backs governance

In a rare move, the regulator stepped in to assure markets that "there are no material concerns on record" with regard to HDFC Bank's "conduct or governance."

• ET Bureau

• Published On Mar 19, 2026 at 10:15 PM IST

The Reserve Bank of India (RBI) sought to quell speculation about governance issues at HDFC Bank after outgoing part‑time chairman Atanu Chakraborty cited "values and ethics" for his exit, rattling investors.

In a rare move, the regulator stepped in to assure markets that "there are no material concerns on record" with regard to HDFC Bank's "conduct or governance."

Also Read: A look at past compliance issues at HDFC Bank

The markpaid little heed to management's commentary. The stock fell as much as 8.4% intraday but pared losses to close 5.1% lower after the RBI issued its statement around 11 a.m. HDFC Bank, which has about a 15% weight in the BSE Sensex, contributed to broader declines; the Sensex ended 3.3% lower at 74,207.24.

Advt During the analyst call, management repeatedly said it had no insight into what prompted Chakraborty to resign 14 months before the end of his second term.

The surprise resignation raised questions among investors about whether this was an isolated boardroom episode or a sign of governance issues that had been suppressed for months.

Most analysts sought an explanation from management on what exactly triggered the chairman's exit and why now. No clarity emerged from either the analyst call or the media call later in the day.

Also Read: 'A buy-on-dips pick': Why HDFC Bank is getting backing from analysts despite management blip

"None of us are aware of what specific issues he had. The board met yesterday. He didn't give any explanation as to his resignation," said Keki Mistry, who was elevated to interim chairman from independent director for three months. He tried to reassure analysts: "It is a little baffling and we will get to the root of it in due course," Mistry said. The bank, he added, will begin the process of appointing a permanent chairman. Mistry is a veteran banker who served HDFC for over three decades.

The development comes ahead of MD and CEO Sashidhar Jagdishan completing his second term in October 2026. The nomination and remuneration committee (NRC) will meet within the next month to recommend the appointment of the managing director and CEO to the RBI.

Advt HDFC Bank is India's most valuable bank with a market capitalisation of Rs 12.30 lakh crore and the second‑highest deposit base (after State Bank of India) at Rs 28.5 lakh crore. It has largely maintained a clean governance record, and a former employee even dismissed the episode as egocentric.

This episode may nonetheless require the bank to provide a more detailed explanation to the U.S. Securities and Exchange Commission (SEC), as its American depositary receipts are listed on the New York Stock Exchange. The ADRs fell 3.3% on Thursday after a 7% drop on Wednesday.