HDFC Bank’s Troubles Pile Up Ahead Of Bagchi’s Arrival

Five days from now, Anup Bagchi takes charge as chief executive of HDFC Bank, and the in-tray he inherits is already full. A fresh internal inquiry, a run of unanswered questions from the spring, and a merger that has been slower to pay off than investors wanted are all waiting for him. For a lender whose reputation for institutional stability is now under scrutiny, the months since March have been unusually noisy.

India’s largest private lender by market valuation is investigating two senior executives, Bloomberg reported. An internal inquiry reportedly found evidence that they disclosed confidential business strategies and potentially market-sensitive information to outsiders, and the bank is now checking whether any of it was misused.

HDFC Bank has acknowledged the review but declined to discuss its findings or name the executives, adding that it will take suitable action once the process ends. Investigators are going through email exchanges among senior managers, Economic Times reported.

The suspected leaks they are tracing concern the Dubai business, payments linked to the Maharashtra State Road Development Corporation (MSRDC), friction between executives, and the strained equation between former chairman Atanu Chakraborty and outgoing managing director and CEO Sashidhar Jagdishan.

Jagdishan retires on October 26 and Bagchi starts the next day, so the outcome of the inquiry will reach a new management team. Disagreements at the top have also spilled into public view more than once this year.

How A Resignation Letter Shook The Bank

The unease traces back to March, when Chakraborty quit as part-time chairman and independent director. His letter said that practices he had seen over the previous two years did not sit well with his personal values and ethics, but it cited nothing specific. That silence turned into a story of its own.

Notably, the shares fell more than 5% that day, and Bloomberg estimated the damage at over $7 billion in market value. The board responded that Chakraborty had not pointed to any specific regulatory or operational concern. The Reserve Bank of India also said its periodic assessment had found nothing material on record about the bank’s conduct or governance.

Two reviews have since helped the bank’s case. ET reported on August 29 that an independent legal review found nothing to substantiate Chakraborty’s concerns. A separate internal examination of the MSRDC deposit arrangements described the conduct as business overreach and not bad faith or personal enrichment. Even so, Jagdishan and two other senior executives received warning letters and ₹1 lakh penalties each.

The Dubai Trail

Chakraborty’s departure also pulled the lender’s overseas arm into the spotlight. ET earlier reported that the bank had dismissed three senior executives after an internal review of alleged mis-selling of Credit Suisse Additional Tier-1 (AT1) bonds through its Dubai operations. The bank admitted gaps in client onboarding at its Dubai International Financial Centre branch and said it had taken corrective action. Dubai’s financial regulator had already barred the branch in September 2025 from onboarding new clients and carrying out certain financial-services activities.

More complaints followed in August. Over 75 investors who bought Carlisle’s Luxembourg Life Fund through the Dubai operations were preparing to approach authorities in India and abroad, alleging principal losses above $13.5 million. They said the insurance-linked product was pitched as capital protected, while leverage magnified their exposure during the Covid-19 market crash, and some alleged that redemption was denied for years. These remain investor claims and not established findings of wrongdoing.

Thinner Margins, A Changing Guard

The 2023 merger with HDFC Ltd enlarged the balance sheet but also brought long-tenor home loans and heavier funding needs. Net interest margin was 3.26% in the June quarter, against 4% before the merger. The bank has been rebalancing its loans and deposits while competing for low-cost deposits and managing pressure on profitability. Investors are still waiting for the full benefits they expected from the integration.

Jagdishan took over as managing director and CEO in October 2020, after Aditya Puri’s tenure of more than two decades. In August he announced that he would not seek reappointment. A Bloomberg report on September 2 linked the leadership strain to differences over direction, saying incoming chairman Rajiv Kumar wanted faster loan growth, more technology investment, action on legacy issues and changes among senior executives, while Jagdishan resisted some of the proposals. The bank disputed key elements of that account and called it “totally inaccurate and misleading”.

What Bagchi Walks Into

The succession question was settled on October 1, when the bank said RBI had approved Bagchi, formerly of ICICI Group, as CEO and MD for three years. He has said that much of the difficult post-merger work is behind the bank, though the transformation continues, and that he will first study the balance sheet, profitability and the institution before deciding how to proceed.

The leak probe is still open, so its findings and any action against the two executives are yet to be known.