HDFC Bank Board to Review Chakraborty's Concerns, Consider Chairman Extension

HDFC Bank's board meets June 18 to review legal findings on Atanu Chakraborty's concerns. Preliminary reports suggest no governance issues. The board will also seek a three-month extension for interim chairman Keki Mistry, pending RBI approval. Mistry's term ends June 18. The bank awaits the central bank's response on the extension request.

Mumbai: The HDFC Bank board is set to convene on June 18 to review the findings of law firms appointed to examine concerns raised by former chairman Atanu Chakraborty in his resignation letter, two sources familiar with the development told ET.

The board will also consider a three-month extension for interim part-time chairman Keki Mistry - subject to approval from the Reserve Bank of India (RBI), sources said.

Also Read: No merit in issues flagged by ex-chair of HDFC Bank: Law firms

ET had reported on June 16 that the law firms appointed by HDFC Bank had found no merit in the issues flagged by Chakraborty. Sources have told ET that the preliminary findings suggest no governance irregularities or ethical breaches of the nature implied in the resignation letter.

In a significant development ahead of the board meeting, members of the bank's audit committee met on Tuesday to deliberate on the findings of the report, sources said.

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The Audit Committee of the Board, which received the findings, comprises M D Ranganath as chairperson, along with members Lily Vadera and Dr Harsh Kumar Bhanwala.

With Mistry's term concluding on June 18, the board is awaiting the central bank's response on a 90-day extension request before deciding the future course of action.

"The board meeting is on the 18th. There is nothing extraordinary but the board will meet," said an official involved in the deliberations. "The bank has sought RBI approval for a three-month extension for Keki Mistry, which is still awaited. He is the chairman till the 18th and the bank will for now await RBI's response on the same before it decides the future course of action."

HDFC Bank did not respond to a request for comment.

ET had first reported on May 18 that the bank's top management and board believed a new chairman should be appointed only after the findings of the ongoing legal review were placed before the board. Mistry himself has indicated he is unlikely to continue beyond the transitional period.

The reviews were set in motion following Chakraborty's dramatic resignation on March 18, in which he cited alleged deviations "incongruent" with his ethics and value systems. The resignation by Chakraborty - a former Secretary at the Department of Economic Affairs and a retired IAS officer - sent shockwaves through India's banking establishment and caused an immediate slide in the bank's stock.

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HDFC Bank subsequently engaged domestic law firms Wadia Ghandy and Trilegal, along with US-based firm Wilson Sonsini, to examine the circumstances surrounding his departure. The scope of the review included board meeting recordings, minutes and agendas from the past two years, as well as all whistleblower letters received and escalated to the board during the period.