When Atanu Chakraborty, the part-time non-executive chairman of HDFC Bank, which is one of the three domestic systemically important banks (D-SIBs) in India, quit abruptly before the end of his tenure, it caused consternation among stakeholders — namely the bank’s board, senior management team, employees, shareholders, and regulators.

The stock was hammered, with the market capitalisation of India’s largest private sector bank cumulatively declining by ₹1,52,689 crore over three consecutive trading sessions — March 19–23.

Eyebrows were raised as the 1985-batch former IAS officer of Gujarat cadre, who last served as Secretary in the Department of Economic Affairs, Union Finance Ministry, in 2019-20, did not cite the usual “personal reasons” for the exit.

That Chakraborty handed in his resignation from a position that fetches ₹50 lakh per annum probably shows that something in him snapped. The perks include sitting fees, reimbursement of expenses for attending board meetings and a car for official and personal use.

The resignation letter, dated March 17, stirred a hornet’s nest. Chakraborty flagged “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”.

The former chairman, whose tenure on the bank’s board was up to May 4, 2027, also stated that the benefits of HDFC’s merger with HDFC Bank in July 2023 are yet to fully fructify.

While Chakraborty, who took up the chairman’s position with effect from May 5, 2021, did not elaborate on his allegation, it raises questions whether the issues he may have brought to the notice of the board were satisfactorily addressed. It also brings to fore the larger issue of shareholder protection in a bank which has no promoter.

A former director of a public sector bank emphasised that a bank’s board has a supervisory role — providing strategic direction, oversight of management, risk management and regulatory compliance, and protecting depositor and shareholder interests. The management executes the vision set by the board.

“However, strain in relationship can arise between the management and the board when the lines between operational and non-operational areas blur. Boardroom differences, if any, should be resolved amicably, without spilling into the open,” he said.

Hot-button issues

Now, speculation is rife that Chakraborty and MD and CEO Sashidhar Jagdishan, who took charge on October 27, 2020, were not on the same page over handling certain hot-button issues at the bank.

Reports suggest Chakraborty wanted a review of the bank chief’s performance before recommending him for a third term and elevating a senior management executive to the board.

The hot-button issues include the RBI (in December 2020) asking the bank to temporarily stop all launches of the digital business generating activities planned under the Digital 2.0 programme and other proposed business generating IT applications; and sourcing of new credit card customers (these restrictions were lifted in 2022). There is also the monetary penalty of ₹1 crore for non-compliance with certain directions issued by RBI on ‘interest rate on deposits’ and ‘recovery agents engaged by banks’ (September 2024).

Further, SEBI (in December 2024) issued an administrative warning over non-compliance with certain provisions of the Merchant Bankers Regulations, Issue of Capital and Disclosure Requirements Regulations, and Prohibition of Insider Trading Regulations.

In September 2025, the Dubai Financial Services Authority prohibited the bank’s Dubai International Financial Centre branch from soliciting or conducting any business with new clients; or soliciting, onboarding or engaging in any financial promotions with any new client.

In November 2025, the RBI fined the bank ₹91 lakh for adopting multiple benchmarks within the same loan category and outsourcing the verification of KYC norms compliance for certain customers.

Damage control

Once Chakraborty’s resignation reached Harsh Kumar Bhanwala, the Chairman of the bank’s Governance, Nomination, Remuneration Committee, four directors (two whole-time and two independent) rushed to the RBI to seek the appointment of Keki Mistry, Non-Executive (non-independent) Director, as interim part-time Chairman for three months.

The bank’s board downplayed the resignation. In an analyst call, Mistry, now interim Chairman, stressed that the bank operates with strong governance standards, internal controls, and an experienced management team. He said: “I would not have taken on this responsibility at the age of 71 if it did not align with my principles and the level of integrity that I would expect from the bank.”

Mistry dismissed the prospect of a power struggle, saying, “The entire bank, the management team works as a cohesive unit and will continue to work as a cohesive unit.”

Renu Karnad, Non-Executive (non-independent) Director, said: “In fact, we had repeatedly asked him (Chakraborty)... to tell us what had triggered this... but he said there was nothing and that was a bit baffling.

The RBI swung into action, issuing a statement that there were no material concerns as regards the bank’s conduct or governance.

It emphasised that the bank has sound financials, and remains well-capitalised with sufficient liquidity.

Expert view

Legal expert and former investment banker Vijay Trimbak Gokhale emphasised that it would be naive to say that the hot-button issues may not have weighed on Chakraborty’s mind while tendering his resignation.

Referring to the Companies Act, Gokhale observed that the director of any company is duty bound to act in good faith to promote the objects of the company and in the best interests of all stakeholders.

So, the former chairman has a fiduciary responsibility to stakeholders to inform the board and the regulator about his concerns over happenings and practices at the bank. “At the same time, the other board members cannot plead ignorance about gaps and lapses in the functioning of the bank,” Gokhale said.

‘Too big to fail’

Banking expert V Viswanathan opined that since D-SIBs are “too big to fail”, the RBI should review its policy and consider having its nominees on their boards. “The role of RBI nominee directors can be confined to corporate governance; risk management policies; and internal audit and statutory audits overseen by the audit committee of the board,” he said.

Where public shareholding exceeds 95 per cent or there are no promoter-directors on the board of a D-SIB, Viswanathan suggested that regulators could consider sector-wise nominees with regard to investments from insurance companies, mutual funds, pension funds, and so on.

“This will ensure that the policies are framed by the board and implemented by the top management,” he said.

While the bank’s board has approved the appointment of external law firms (domestic and international) to conduct a review regarding Chakraborty’s resignation, experts say the RBI and SEBI need to conduct their own review into l’affaire HDFC.

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Published on March 30, 2026