Why Did Atanu Chakraborty Quit HDFC Bank?

'During the bank's board meeting, many directors asked him if there is a governance issue but he said there is none.'

The dark clouds that had gathered over India's largest private lender, HDFC Bank, on March 18, 2026 as its part-time chairman Atanu Chakraborty resigned with immediate effect citing 'ethics', had blown over by Thursday, March 19, 2026, noon with the Reserve Bank of India coming out strongly in its support to stress there were no governance or conduct issues at the bank.

Chakraborty, a former bureaucrat who had sought to be relieved from his post immediately, had attributed the decision to certain happenings and practices within the bank over the last two years and those were not in congruence with his personal 'values and ethics'.

RBI's Swift Assurance

Following his decision, four HDFC Bank board members met RBI officials, including two deputy governors, on March 18, seeking its nod to appoint board member Keki Mistry as interim part time chairman.

The regulator quickly approved. HDFC Bank began firefighting even before the stock markets opened with an early investor call addressed by six of its 12 current board members, including Mistry and MD & CEO Sashidhar Jagdishan.

'I would not have taken on this responsibility at the age of 71 if it did not align with my principles and my level of integrity that I would expect from the bank,' Mistry told analysts.

He categorically stated there are no material issues or operational concerns at the bank, and none of the board members are aware of the issue that led to Chakraborty's resignation.

Mistry said there could be difference of opinion on minor issues but emphasised 'there was no power struggle in the bank'.

Jagdishan said the board tried to persuade Chakraborty to refrain from going ahead with his decision.

'As the meeting was going on, as these developments were unravelling... where despite every board member trying to persuade the past part-time chairman to take back his resignation or sort of elaborate on any of the concerns that he may have, which would have been addressed as they were in the past, or take back some of the language that was there in that letter,' Jagdishan said in a call with media later in the day.

Market Reaction and Bank's Position

Sources in the bank said there was some relationship issue between the bank management and the earlier chairman leading to the former's decision to make a sudden exit.

"During the bank's board meeting, many of the directors asked him (Chakraborty) if there is a governance issue but he said there is none," said a source.

RBI Soothes Nerves

'Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance,' the RBI said in a statement at around 11 am Thursday.

The bank remains well-capitalised and its financial position remains satisfactory with sufficient liquidity, it noted.

The RBI also said HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financial, a professionally run board and competent management team, adding it will continue to engage with the Board and management on the way forward.

Meanwhile, in New Delhi, Department of Financial Services Secretary M Nagaraju also quelled concerns and said: 'HDFC Bank is a strong institution with strong fundamentals.'

Post-Merger Exits and Leadership Concerns

Analysts noted that HDFC Bank has seen the exit of senior officials post the merger with HDFC.

'Exits at HDFCB have accelerated post the HDFC Ltd merger, creating a visible credible leadership gap, with Chairman Atanu Chakraborty's resignation over relationship issues with the management now raising concerns even in the board,' broking firm Emkay's analysts said in a report.

'Though the management and the board assured of no governance, operational, regulatory, or power struggles, we believe the bank must curb management exits and rebuild leadership strength either internally or externally,' they said.

Feature Presentation: Rajesh Alva/Rediff