HDFC Bank’s board may seek to reappoint Sashidhar Jagdishan as MD & CEO for a third term following a legal review by two external law firms engaged by the bank that found no evidence to support the allegations made by former part-time Chairman Atanu Chakraborty in his March 17, 2026 resignation letter.

However, legal and banking experts believe the Reserve Bank of India (RBI) is unlikely to be swayed by a review conducted by law firms appointed by the bank itself. They note that such a report can, at best, form just one component of the central bank’s broader “fit and proper” criteria for assessing an individual’s suitability to lead a financial institution.

The other criteria include integrity and reputation, track record and regulatory compliance, professional competence, conflict of interest, governance and conduct, and financial soundness.

In his resignation letter, Chakraborty alleged that “certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal values and ethics.”

In a stock exchange filing on June 26, HDFC Bank stated that the law firms — Wilson Sonsini Goodrich & Rosati, P.C. and Wadia Ghandy & Co. — reviewed thousands of documents and interviewed independent directors and several members of senior management.

“The Bank and the external law firms repeatedly requested that Chakraborty speak with the firms as part of the legal review, but ultimately the interview with Chakraborty did not occur,” the Bank said.

However, in an interview with a business magazine Fortune, Chakraborty said, “I specifically asked the legal firms for the scope and legal basis for such a review. They did not provide me with the details, which is why I did not speak to them.”

Having completed an extensive legal review, the law firms concluded that Chakraborty’s statement and its implications were not substantiated by the documentary record and witness interviews, the bank added.

Aditya Puri, who was HDFC Bank’s chief since inception in 1994, passed the baton to Jagdishan in October 2020. Jagdishan’s second three-year term is set to end on October 26, 2026.

Experts views on the legal review

Sonam Chandwani, Managing Partner, KS Legal & Associates, said that while the outcome of an internal audit or forensic review commissioned by the bank is undoubtedly a relevant piece of information, but it unlikely to be treated as determinative by the RBI while considering the reappointment of a bank’s CEO.

She emphasised that the RBI’s assessment goes well beyond a single report, encompassing governance standards, regulatory compliance, risk management practices, the quality of board oversight and the institution’s overall conduct.

In this context, she added, an investigation conducted by an independent agency appointed by the regulator would carry greater institutional credibility and help reinforce public confidence in the regulatory process.

Banking expert V Viswanathan observed that the appointment of the law firms appears to be more to affirm that the then Chairman was ‘wrong’ in citing conflict to his ethics and values.

“No comments, whatsoever, have been made on the vigilance committee appointed by ACB (Audit Committee of the Board), five days prior to the Chairman’s resignation.

“The ‘legal certificate’ neither adds value to calm down the market nor strengthens the chances of an approval from RBI to the board’s recommendation in the future to extend the term of MD & CEO for another three years,” he said.

Concerns over conflict of interest

Legal expert Vijay T Gokhale pointed out that there could be reasonable apprehension regarding the impartiality of law firms appointed and remunerated by the bank’s management.

“The conflict of interest is inherent in such an arrangement. Secondly, minutes of the board meeting is not the only repository of evidence of any wrongdoings that may have occurred.

“Thirdly, the objective of the inquiry should not be to prove Atanu Chakraborty wrong or to prove that he did not explicitly speak out his apprehensions in board meetings,” Gokhale said.

He underscored that, in the interest of maintaining financial market integrity and reinforcing faith of the common man in the banking industry, RBI should intervene and conduct it’s own investigation/audit.

Siddartha Karnani, Partner, King Stubb & Kasiva, Advocates and Attorneys, said, “The audit by the bank can be an important input in understanding the facts, but it is unlikely to be the sole determinant for the RBI when considering reappointment of a CEO.”

He stated that the RBI exercises its own supervisory and regulatory judgment, taking into account a broad range of factors, including governance standards, risk management practices and the overall ‘fit and proper’ criteria prescribed under the regulatory framework.

Published on June 28, 2026