Mumbai: India’s largest private sector lender HDFC Bank has appointed at least two law firms Wadia Ghandy & Co, and Trilegal to conduct a review of the circumstances leading to former chairman Atanu Chakraborty’s sudden exit last week, said two people aware of the matter.
These law firms have been tasked with aiding the bank’s internal legal counsels to sift through pages of minutes of past board meetings to see if Chakraborty had made any serious observations, according to one of the two people cited above. The bank’s board and the management maintained they had no inkling of Chakraborty’s exit and he did not specify what he was referring to as part of his ethical concerns despite being repeatedly asked.
Earlier on Tuesday morning, its board approved the appointment of external law firms to conduct a review of Chakraborty’s resignation letter. The names of the law firms were not disclosed in the regulatory filing. The bank reiterated on Monday that “Chakraborty did not mention any happenings and practices which were not in congruence with his personal values and ethics.”
“These law firms will look at the board meeting minutes to see if the bank missed anything,” said one of the people cited earlier.
Emails sent to HDFC Bank, Trilegal, and Wadia Ghandy & Co remained unanswered till press time.
Asked if HDFC Bank plans to appoint an external auditor or a board committee to investigate the matter, chief executive Sashidhar Jagdishan told Mint in an interview on Sunday that the board is going to be meeting more frequently to try and see what are the things that it needs to do.
“My hunch tells me that we will take some proactive measures to be able to assess whether there are things that we need to tighten, we need to enhance and be more proactive about it rather than wait for any new or potential issues in the future,” said Jagdishan.
On 8 March, HDFC Bank said Chakraborty has resigned with immediate effect, with his letter from 17 March to the board citing “certain happenings and practices within the bank” that were “not in congruence” with his personal values and ethics.
In a late-night announcement, the lender said that the Reserve Bank of India (RBI) on Wednesday approved the appointment of board member and HDFC group veteran Keki Mistry as an interim part-time chairman for three months from 19 March.
The bank got immediate backing from RBI, which said on 19 March that based upon its periodical assessment, there are no material concerns on record as regards its conduct or governance. “The bank remains well-capitalized and the financial position of the bank remains satisfactory with sufficient liquidity,” the regulator said in a statement.
India’s markets regulator was not far behind, although not saying anything directly. Mint reported on 23 March that Securities and Exchange Board of India (Sebi) chairman Tuhin Kanta Pandey said that if there are concerns, they must be explicitly disclosed and substantiated rather than left to insinuations.
“When they say such a thing, it is important to give a reason. Nobody is expected to make any insinuations without proper evidence and recording…as it has an impact,” Pandey said at a press conference following its board meeting.