HDFC Bank case: Ex-Chairman Atanu Chakraborty questions external legal review, calls it “superfluous”

Former chairman has called into question the need for the lender’s external legal review into the circumstances surrounding his resignation, describing the exercise as unnecessary and maintaining that he declined to participate because the bank never shared the scope or legal basis of the investigation.

Speaking after disclosed that an independent review had found no evidence to substantiate the concerns raised in his March resignation letter, Chakraborty said he had repeatedly sought the terms of reference governing the exercise but did not receive a response, Mint said in an exclusive report.

According to him, requests for the review mandate were made several times before he decided against engaging with the process. He also maintained that he did not require validation from an external agency for the stand he had taken.

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The remarks come a day after India’s largest private-sector lender informed stock exchanges that the review conducted by two external law firms did not find evidence supporting the concerns flagged by Chakraborty when he stepped down as part-time chairman in March.

The bank said the review examined board records, committee papers and other contemporaneous material, besides interactions with independent directors, senior management and key control function heads.

It concluded that the available evidence did not support the issues raised in the former chairman’s resignation letter.

Chakraborty’s sudden exit had triggered one of the biggest governance debates in the Indian banking sector this year.

In his resignation letter dated March 17, he had stated that developments and practices within the bank over the previous two years were inconsistent with his personal values and ethical standards.

The brief explanation, without elaborating on specific instances, sparked investor concerns and led the board to commission an external legal review.

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The bank had appointed domestic law firm Wadia Ghandy & Co along with US-based Wilson Sonsini Goodrich & Rosati to independently examine the circumstances surrounding the resignation.

HDFC Bank had said the move was intended to reinforce governance standards and provide the board with an objective assessment.

ET had earlier reported that preliminary findings had not indicated governance lapses warranting further action by the board.

Following completion of the exercise, the bank informed exchanges that the law firms’ findings were inconsistent with the assertions made in Chakraborty’s resignation statement and did not identify any basis to support those claims.

The lender reiterated its commitment to high governance standards and said the review process had now concluded.

The episode has unfolded at a crucial juncture for HDFC Bank, which is awaiting regulatory approvals on key leadership matters, including the reappointment of managing director and chief executive Sashidhar Jagdishan.

The governance questions that surfaced after Chakraborty’s resignation had weighed on investor sentiment earlier this year, prompting the board to seek an independent assessment before moving ahead with its succession and regulatory agenda.