Exclusive | Atanu Chakraborty breaks silence on HDFC Exit, says values and ethics at core

Twelve days after his abrupt resignation, Atanu Chakraborty has said his decision to step down from HDFC Bank was rooted in concerns around “values” and “ethics”, even as he stopped short of detailing specific instances that led to his exit.

In his first interview since stepping down, Chakraborty indicated that his resignation was not about a single trigger event, but stemmed from broader discomfort over time.

“Even a month later would have had as much speculation… because of a bit of lack of understanding in the larger domain about the words ‘values’ and ‘ethics’,” he said.

His comments come after he wrote in his resignation letter that “certain happenings and practices within the bank… are not in congruence with my personal values and ethics,” a statement that had raised questions around governance at the country’s largest private lender.

The bank’s board had said it had no prior indication of such concerns, while the Reserve Bank of India issued a rare public reassurance, stating it had found no material issues with the bank’s conduct or governance.

Chakraborty outlined the role of independent directors, stressing that their responsibilities go beyond oversight to ensuring high standards of integrity, transparency and accountability.

“They have onerous responsibilities with respect to upholding ethical standards, probity, integrity… and fiduciary responsibility with respect to depositors,” he said.

Emphasising a customer-first approach, he added, “For me, the customer is God… there has to be a long-term relationship of loyalty with the customer, not a transactional one,” while cautioning against “risky practices” that could put stakeholders at risk.

Reflecting on his tenure, Chakraborty pointed to key strategic moves, including the merger with HDFC Ltd, the sale of Credila, and the IPO of HDB Finance, alongside efforts to strengthen governance frameworks. However, he noted that better structuring and freer flow of information across board committees were essential for informed decision-making.

Despite his concerns, Chakraborty expressed confidence in the bank’s internal strength, particularly its middle management. “The senior level will move on, but the middle level is very important… I see a great amount of energy and verve; they need to be channelised,” he said.

Since his resignation, HDFC Bank’s stock has fallen around 13%, eroding nearly ₹1.6 lakh crore in market capitalisation, reflecting investor unease even as regulators have sought to calm concerns.

Also Read | HDFC Bank valuations at 16-year low; JPM upgrades, Jefferies sees 64% upside

Below is the excerpt of the interview.

Q: Let me start with the 18th of March, sir. That is when you decided to put in your papers. Now, abrupt, sudden—there is nothing “routine” in your words; you called your resignation routine, but there is nothing routine in the manner in which the resignation happened and what transpired post that, and what you said in your letter. If I could start by asking you: what prompted you to put in your papers? What was the trigger? What was the tipping point? What was the final nail in the coffin?

Chakraborty: Let me tell you, there is a bit of background to it. I joined the bank as a part-time chairman, which is also seen as a non-executive chairman. Both are very similar terms, similarly understood, and I was an independent director on the board of HDFC Bank about five years back, slightly less than that. However, my name had been doing approval rounds with the RBI before, so I had some opportunity to see the bank and felt that it needed to grow bigger and also improve its asset side.

And so, within a year, you had seen—with the help of management and HDFC Ltd, which was the erstwhile promoter of the bank—that the bank went into a merger with its parent, which was one of the biggest mergers in the history of the bank, a very well-executed merger as well. However, as always, there are small and bigger flaws which always remain, but that is okay—it went off well, which also improved the asset side. However, I have written in my letter that it has to fully fructify; I will come to that later.

Subsequently, the bank was also able to sell Credila, one of its companies, in a sense monetising it as per regulatory instructions. Subsequently, the bank could also do the IPO of HDB Finance, one of the NBFCs under it, as per the regulatory guidelines laid down for banks as well as for systemically important NBFCs. These were all part of some of the actions on the business side, strategic actions during the time that I was in, apart from setting up—rather being a participant in, shall I correct myself—in setting up a good assurance setup under very good teams who were able to do that, and also improve the governance structure.

All those existed, but they needed better structuring and better flow of information to and fro between the committees themselves, and to allow greater free-flowing discussions in the committees and the board so that the issues are discussed, addressed, spoken to, and good, informed decision-making takes place, in which every director—whether executive, non-executive or independent—participates wholeheartedly, with varying degrees, naturally. So that was the background.

And as you asked the question—what happened? Well, my resignation letter needs to be read in its entirety, starting with the first paragraph, which I elaborated further. And then I have also said towards the end that I have great faith in the verve and energy of the middle-level management. That’s what I always look at. The senior level will move on, but the middle level is very important, and that is where I see a great amount of energy and verve; they need to be channelised.

Q: Just to clarify— you mentioned that over the past two years you observed certain practices that made you uncomfortable and eventually led to your resignation. Did you raise these concerns with the board at any point during this period? If so, were they addressed satisfactorily, or did the lack of resolution ultimately lead to your decision to resign? Additionally, could you help us understand what specifically prompted you to submit your resignation on March 18?

A: Leave aside the date, even a month later, would have had as much speculation as this because of a bit of lack of understanding in the larger domain about the word of value and ethics both. Now, if you see, my first term was largely covered grappling with the issues arising out of merger, which was very large - disbalances balance sheet, so and so forth, and also preparing for meeting the regulators conditions. Not that things were not happening during that time.

If we largely see what are independent directors charged with? They have onerous responsibilities with respect to upholding ethical standards, probity, integrity, ensuring that management performs adequately, shareholders wealth is maximised. They also have fiduciary responsibility with respect to depositors, which means that value terms, there needs to be a very high level of values with respect to honesty, integrity, transparency, fairness and accountability, which translates for customer, and that's very important, because for me, customer is the God, and I guess should be. There has to be a long-term relationship of loyalty with the customer, not transactional. There has to be avoidance of risky practices which puts customer or depositor or anybody else dealing with bank at risk, also that, the bank contributes to the stability of the economy, improves credit growth. These are few of the conduct issues and all these onerous responsibility ensuring that also lies rather largely lies with the independent directors, therefore that largely is the background setting.