HDFC Bank shares trade higher after probe finds no evidence supporting Atanu Chakraborty's concerns

Shares of HDFC Bank were trading flat with a positive bias on Monday, June 29, as the private sector lender on Saturday said an independent legal review conducted by two external law firms found no evidence to substantiate concerns raised by former chairman Atanu Chakraborty in his resignation letter or subsequent public statements.

When last seen, shares were trading at ₹797.20 apiece on the NSE, up 0.27%.

The bank said the review, announced on March 24, examined whether any concerns flagged by Chakraborty were evident from the records, whether he had recorded any dissent during his tenure, and whether such dissent, if any, had been addressed.

Chakraborty resigned as chairman of the country's second biggest lender, HDFC Bank, citing ethical concerns. This was the first time that a part-time chairman of HDFC Bank left mid-way, raising concerns over its functioning.

The review was carried out by Wilson Sonsini Goodrich & Rosati, P C and Wadia Ghandy & Co over a three-month period, HDFC Bank said in a regulatory filing on Friday.

The law firms reviewed Board and committee meeting minutes and agenda papers covering the two years preceding Chakraborty's resignation, examined thousands of documents, and conducted interviews with independent directors, including committee chairpersons, the Managing Director & Chief Executive Officer, and senior executives heading key control and assurance functions, it said.

The external law firms, as reported by PTI, repeatedly requested Chakraborty to participate in the review, but the interview did not take place.

"Having now completed an extensive legal review, external law firms found that Chakraborty's statement and its implications were not substantiated by the record and witness interviews," it said.

The review found that the minutes of board meetings attended by Chakraborty followed a comprehensive drafting, review and approval process that gave him the opportunity to record any dissent or concerns, it said.

It also found no contemporaneous evidence in Board or committee records, meeting materials or communications supporting the issues raised in his statement, it said.

Further, witness interviews did not corroborate Chakraborty's allegations, the bank said.

The law firms also examined references made by Chakraborty to the "Dubai matter" in his post-resignation public statements and found no contemporaneous evidence showing that he had raised concerns relating to his personal values and ethics or disagreed with decisions taken by the Board or its committees on that issue or any other matter.

What happened on March 18, 2026

On March 18, 2026, Atanu Chakraborty tendered his resignation as the part-time chairman and independent director of HDFC Bank with immediate effect.

Chakraborty, in his resignation letter, said, "Certain happenings and practices within the bank, which I have observed over the last two years, are not in congruence with my personal values and ethics. This is the basis of my aforementioned decision. I confirm that there are no other material reasons for my resignation other than those stated above."

However, following Chakraborty's resignation, Keki Mistry, in a concall, said, "We wish to assure all shareholders that there are no material matters for the resignation." No operational issues highlighted; collective resolve to protect all stakeholders is unwavering. The bank operates with strong governance standards, Mistry added.

"Based on our discussions, there were no specific practices or happenings that were brought to our attention," Mistry added.

Mistry further said, "I want to emphasise I would not have taken this responsibility at age 71 if it did not align with my principles & integrity."

HDFC Bank further said that based on an application made by the bank in this regard, the Reserve Bank of India, on March 18, 2026, granted its approval for the appointment of Keki Mistry as an interim part-time chairman of the bank with effect from March 19, 2026, for a period of three months.

What RBI said following the incident

In April 2026, RBI Governor Sanjay Malhotra said the Reserve Bank did not come across any governance or conduct-related issues during supervisory inspection of HDFC Bank.

Responding to a question at the post-monetary policy press conference on the sudden resignation of HDFC Bank Chairman Atanu Chakraborty and subsequent fall in its share price, Malhotra said the RBI had also seen minutes of meetings of the lender, and the RBI did not find any thing of material concern.

Malhotra said the RBI in its press release on March 19 too had said there were no material concerns on record as regards the bank's conduct or governance.

"HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financials, a professionally run board and competent management team. Based on our periodical assessment, there are no material concerns on record as regards its conduct or governance," the RBI said in its press release.

Other developments

On March 20, HDFC Bank terminated the services of three employees for gaps in client onboarding at its Dubai International Financial Centre (DIFC) branch.

Following the allegations of mis-selling, the local regulator -- Dubai Financial Services Authority -- barred HDFC Bank from onboarding new customers at its DIFC branch last September.

"In sum, the contemporaneous evidence reviewed was inconsistent with Chakraborty's statement, and the external law firms' review did not identify any basis for the statement," HDFC Bank said, quoting the findings of the legal review.