The abrupt resignation of Atanu Chakraborty sent shockwaves through the market. Within hours, investors lost more than ₹1 lakh crore in wealth. The development also raised fresh concerns about governance at HDFC Bank.
On Thursday morning, the bank’s shares fell sharply. The stock dropped nearly 9% in early trade and hit a new 52-week low. It opened at ₹770 and dragged down the broader market. As a result, the Nifty 50 also slipped, with HDFC Bank contributing significantly to the decline.
Later in the day, the stock recovered slightly and traded at ₹810.80, still down 3.8% from the previous close.
Chairman cites ethical differences
Chakraborty stepped down citing personal and ethical concerns. In his resignation letter dated March 17, he wrote, “certain happenings and practices within the bank, that I have observed over the last two years, are not in congruence with my personal values and ethics.”
He clarified that no other reason led to his decision.
After resigning, he explained that he was not accusing the bank of wrongdoing. “I am not pointing out any wrongdoings at the bank. My ideologies did not match with the organisation,” he said.
Chakraborty, a former finance ministry official, joined the board in May 2021. He was reappointed in 2024 for a term until May 2027. During his tenure, the bank completed its $40-billion merger with HDFC Ltd, creating a financial giant and making it one of the country’s largest banks.
Investors react with heavy selling
Investors quickly reacted to the unexpected news. The stock plunged up to 8.7% during early trading, marking its steepest fall in over two years.
Meanwhile, the bank’s US-listed ADRs had already fallen more than 7% overnight. Overall, the stock has declined around 15% so far this year and remains close to its yearly low.
Interim chairman steps in
To maintain stability, the Reserve Bank of India approved the appointment of Keki Mistry as interim part-time chairman for three months starting March 19.
Mistry tried to calm investor concerns. He said there were no governance or operational issues raised during board discussions. “Based on our discussions, there were no specific operational or other issues that have been highlighted,” he said.
He also rejected claims of internal conflict, stating that there were “no power struggles within the bank.”
At the same time, Deputy Managing Director Kaizad Bharucha will take on additional responsibilities during the transition period.
RBI reassures markets
The RBI also stepped in to reassure investors. It emphasised that HDFC Bank remains a Domestic Systemically Important Bank (D-SIB) with strong financial health and professional management.
The central bank said its regular reviews show “no material concerns on record as regards its conduct or governance.” It also highlighted that the bank remains well-capitalised and has sufficient liquidity.
Analysts see overreaction
Despite the sharp fall, many analysts believe the market reaction may be excessive. Brokerage firms noted that the bank’s core fundamentals remain strong. However, they warned that governance concerns could weigh on the stock until the board provides more clarity.
Some experts also pointed to uncertainty around CEO Sashidhar Jagdishan and his future tenure as a possible concern. Market analyst Deven Choksey described the fall as a move into “deep value” territory. Meanwhile, Ashika Capital called it a potential “buy on dips” opportunity.
Overall, analysts said the resignation does not affect the bank’s fundamentals but stressed the need for greater transparency from the board.
Why this matters
HDFC Bank plays a crucial role in India’s financial system. It has a balance sheet of ₹40.89 trillion and serves over 120 million customers. It also holds more than 10% of the country’s banking deposits.
Therefore, any instability at the bank draws close attention from regulators and investors. For now, both the bank’s leadership and regulators are working to stabilise the situation after a sudden exit that erased massive market value and triggered governance concerns.