Reserve Bank of India Governor Sanjay Malhotra on April 8 said the central bank has found no material governance concerns at HDFC Bank, following the resignation of the lender's chairman, who stepped down citing ethical differences, as per PTI. Malhotra responding to a question at the post-monetary policy press conference on sudden resignation of HDFC Bank Chairman Atanu Chakraborty and subsequent fall in its share price said RBI had also seen minutes of meetings of the lender, and the RBI did not find any thing of material concern.
He 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, professionally run board and competent management team. Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance," the RBI said in its press release.
Chakraborty had resigned on March 18.
HDFC Crisis
HDFC Bank had come into spotlight on March 19 after former chairman Atanu Chakraborty HDFC Bank resigned citing concerns over certain internal developments that he said were not aligned with his personal values and ethics.
In his resignation letter, the outgoing chairman stated that some "happenings and practices" observed over the past two years influenced his decision to step down, even as he acknowledged his role during key milestones such as the merger of HDFC Bank with HDFC Ltd.
Following this, HDFC share price witnessed a continuous decline as it fell 26.2 per cent in Q4 FY26, its worst quarterly performance since March 2020. Valuations of HDFC Bank also eased meaningfully following the recent correction, bringing the stock closer to long-term averages. The bank's price-to-book multiple has moderated to 1.84 times its one-year forward book value, well below its five-year average of 2.72 times.
In a conference call that the Bank hosted with analysts and investors on March 19, Keki Mistry, the new interim Chairman of HDFC Bank, said, "I want to emphasise I would not have taken this responsibility at the age of 71 if it did not align with my principles and integrity." Mistry further said that he would like to assure all shareholders that there are no material issues behind the resignation, adding that the Reserve Bank of India has approved his appointment as interim part-time chairman for a period of three months. He emphasised that no operational issues have been flagged and reiterated that the bank continues to function with strong governance standards, while underscoring the collective resolve of the board and management to safeguard the interests of all stakeholders.
RBI's Statement
In a press release on the same day (March 19), RBI said that it has taken note of the recent developments in HDFC Bank and highlighted that;
- A transition arrangement as requested by the Bank has been approved by the Reserve Bank as regards the position of Part-Time Chairman of the Bank.
- HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financials, a professionally run board, and a competent management team.
- Based on our periodic assessment, there are no material concerns on record as regards its conduct or governance.
- The bank remains well-capitalised, and its financial position is satisfactory with sufficient liquidity.
- Reserve Bank will continue to engage with the Board and management on the way forward.
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