HDFC Bank Hires Law Firms to Probe Chairman's Abrupt Exit over 'Ethical Differences'

Six days after HDFC Bank's part-time Chairman Atanu Chakraborty resigned from his position citing "values and ethics" differences, the bank on Tuesday appointed external law firms to investigate the resignation.

This is the latest development made by the private lender after Chakarborty's abrupt decision wiped out around ₹1 lakh crore in market value in a single session.

"To reinforce the robust governance standards of the Bank, the Board of Directors of the Bank at its meeting held on March 23, 2026, took a proactive step and approved the appointment of external law firms (domestic and international), to conduct review regarding Mr Chakraborty’s resignation letter," HDFC Bank said in an exchange filing.

"The said law firms have been advised to provide their report on the same within a reasonable period of time,” the bank added.

In the aftermath of Chakraborty's exit the bank held an early analyst meeting and even the Reserve Bank of India weighed in. But one question lingered: what really drove him to quit?

HDFC Bank had previously mentioned that the exit may have stemmed from a rift between Chakraborty and the management.

However, according to a Bloomberg report, it wasn't simply a vague disagreement, it was a full-scale boardroom confrontation.

Chakraborty reportedly called a board meeting on short notice on March 18 in Mumbai, giving directors little information about the agenda. When they gathered, he submitted his resignation to the nomination and remuneration committee before the full board had even been informed. Directors tried to persuade him to stay, and when that failed, urged him to soften the language in his resignation letter. He refused both requests and declined to elaborate on what he meant by "ethical differences."

Bloomberg's report points to three core grievances.

The first involved the Credit Suisse AT1 bond fallout. When Switzerland's regulator wrote down roughly $17 billion of Credit Suisse bonds during its rescue by UBS in 2023, several global investors were wiped out, including some HDFC Bank customers who alleged they were not adequately warned about the risks.

Some executives were held accountable, but Chakraborty reportedly felt the action didn't go far enough and wanted more senior officials to be held responsible. Management disagreed, creating a deadlock.

The second was a regulatory ban on HDFC Bank's Dubai branch, where the Dubai International Financial Centre had identified lapses in processes and barred the bank from taking on new customers. The bank says it has since completed a review and taken corrective action, but the episode deepened Chakraborty's frustration, as per Bloomberg.

The third reason was broader. A general dissatisfaction with the bank's performance, including its profitability, customer service, and technology. While peers like SBI and ICICI Bank have seen their stock prices climb sharply over the past three years, HDFC Bank's shares have largely stagnated.

Chakraborty's exit was all the more unexpected given his timing, he was midway through an extended term set to run until May 2027. He was first appointed as part-time chairman in April 2021 and reappointed in May 2024.

HDFC Bank's MD & CEO Sashidhar Jagdishan, speaking to the Economic Times, earlier said that the bank would act "ruthlessly" against any misconduct and move to fix gaps and tighten controls. He described dealing with the fallout as "like fighting a ghost," and acknowledged that despite Chakraborty's five-and-a-half-year tenure, the resignation came as a surprise.