HDFC Bank Wants to Keep Interim Chairman a Bit Longer — Here's Why

HDFC Bank is seeking a 90-day extension from the Reserve Bank of India for its interim part-time chairman Keki Mistry, whose current term ends on June 18. The move comes as the bank's board and senior management want to wait for the outcome of an ongoing legal review before appointing a full-time chairman, according to a report by the Economic Times.

"The view within the bank is that initiating the process for appointing a new chairman before the review concludes could be premature and may complicate governance discussions currently underway," a bank official told the publication.

Mistry, however, has indicated that he is unlikely to continue beyond his transitional role, even as the board pushes for the extension, the report added.

Why There's a Vacancy

The search for a new chairman follows the abrupt resignation of Atanu Chakraborty on March 18, who stepped down midway through an extended term that was due to run until May 2027.

The departure rattled markets. HDFC Bank's shares nosedived nearly 9% the following day, wiping out approximately ₹1 lakh crore in market value and dragging the bank's market capitalisation down to just over ₹11.85 lakh crore. Its American Depository Receipts also closed 7.5% lower.

In his resignation letter, Chakraborty said certain practices he had observed over the past two years were "not in congruence" with his personal values, adding there were no other material reasons for his exit.

Speaking to CNBC-TV18 later, he described it as a personal decision that arises when a "dilemma" develops between one's value framework and an organisation's approach. Without getting into boardroom specifics, he pointed to lapses at the bank's Dubai operations dating back to 2018, involving customer onboarding and conduct irregularities that drew regulatory scrutiny in India and abroad.

Chakraborty's Reasons

While the bank's management, led by CEO Sashidhar Jagdishan, described these as "technical" lapses in documentation or interpretation, Chakraborty viewed them differently.

He also pointed to delays in accountability, noting that penalties against officials involved in the mis-selling of AT1 bonds in Dubai came several years after the lapses occurred, raising questions, in his view, about the timeliness of corrective action.

For Chakraborty, the distinction between reactive correction and proactive ethical alignment was central to his unease. He argued that for an independent director, the role goes beyond oversight of performance metrics, it must extend to safeguarding probity, ensuring transparency and aligning business conduct with the long-term interests of depositors and shareholders. When those principles are not prioritised, he said, it becomes a personal call to exit.

He clarified that CEO Jagdishan's reappointment was never discussed during his tenure, seeking to dispel speculation that leadership continuity played a role in his exit. He also said personality differences had been overstated and were not a determining factor. The issues, he suggested, ran deeper than individual equations.

On the HDFC Ltd merger, Chakraborty pushed back against concerns that the integration had created structural stress, saying the transaction was broadly aligned with regulatory expectations and had strengthened the bank's overall position.