HDFC Bank Ltd.’s chairman resigned unexpectedly citing ethical differences, wiping $7 billion off the lender’s market value Thursday and prompting an unusual public defense from India’s banking regulator.
Atanu Chakraborty, the lender’s part-time chairman since 2021, stepped down late Wednesday. “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,” he wrote in a letter, without elaborating.
He later walked back some of his comments, telling a local television channel that his departure was not indicative of any wrongdoing at the bank.
The shares closed 5.3% lower on Thursday, the biggest single day slump since June 2024. The bank shed more than $7 billion in market value, dragging down the broader Indian market.
In a rare move, the Reserve Bank of India defended HDFC Bank in a statement describing it as a systemically important lender “with sound financials, professionally run board and competent management team.” The regulator said that based on a periodic assessment, “there are no material concerns on record as regards its conduct or governance,” adding that the bank is well-capitalized and has sufficient liquidity.
Chakraborty’s resignation marked another setback for the bank, coming a few years after it was caught up in the historic fallout from Credit Suisse’s Additional Tier‑1 bonds. It also adds to the scrutiny the bank has faced after being barred in September from onboarding new customers at its Dubai branch for alleged lapses. Investors and analysts are closely watching whether the resignation was an isolated boardroom issue or points to deeper governance concerns.
HDFC Bank is India’s largest lender by market value, and foreign institutional investors owned about 48% of its shares as of end-2025. Only two local lenders — State Bank of India and HDFC Bank — feature in the top 100 global banks by total assets.
The lender said India’s banking regulator approved the appointment of Keki Mistry as interim chairman for three months starting March 19. Mistry told analysts in an investor call on Thursday that no specific operational issues were found at HDFC Bank and that the board is unified. He said the bank will consider a succession plan for its chief executive officer in due course. Current CEO Sashidhar Jagdishan completes his three-year term in October and can be reappointed.
The bank has not yet discussed Jagdishan’s reappointment, Mistry said on a media call Thursday. He added that the board will meet in a month to deliberate on names to be proposed to the RBI for the next CEO.
HDFC Bank is planning to hold a board meeting as soon as today, so that its newly appointed chairman can take stock of the situation and seek other directors’ views on the recent developments, according to people familiar with the matter. The discussion is also likely to include ways to improve the bank’s profitability and governance, and address any potential reputation damage, said the people, who asked not to be identified discussing private matters. HDFC Bank didn’t respond to a query by Bloomberg.
Deven Choksey, managing director at DRChoksey FinServ said the RBI had done a good job to calm concerns among stakeholders. While HDFC Bank’s financials remain robust, the market will now wait for “governance evidence,” he said.
The bank’s stock enjoyed the highest number of buy ratings among global banks with a market capitalization of more than $100 billion, data compiled by Bloomberg showed.
HDFC Bank has struggled since it merged with Housing Development Finance Corp. in 2023. The deal saddled the combined entity with a large pool of long-tenor home loans, which has weighed on its liquidity and margins. The lender’s shares have underperformed the broader market and large private-sector rivals since the merger.
“While fundamentals remain strong with good return on assets, at this point in time governance concerns will weigh down heavily on the stock,” Macquarie analyst Suresh Ganapathy wrote in a note, adding that investors would want more comfort from the board. The firm removed the bank from its “marquee” buy list.
This January, HDFC Bank posted better-than-expected results on healthy loan growth and its executives were expecting that vertical to expand faster than the overall banking system in the next financial year.
After Credit Suisse’s collapse, some HDFC Bank clients alleged the lender had missold AT1 bonds. The bank maintained it had complied with all applicable laws.
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