Source : INDIA TODAY NEWS
Shares of HDFC Bank fell sharply in Thursday’s trade, declining 5% in early trade, as investors reacted to the sudden resignation of its part-time chairman, Atanu Chakraborty.
The shares of the private lender were down 5.05% to Rs 800.35 on the Bombay Stock Exchange (BSE).
The stock emerged among the top losers on the benchmark indices, underperforming the broader market amid concerns around governance after Chakraborty stepped down citing issues related to “values and ethics”.
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In an exchange filing, HDFC Bank said Chakraborty resigned with immediate effect, adding that there were no reasons other than those mentioned in his resignation letter. The bank also confirmed that the Reserve Bank of India has approved the appointment of Keki Mistry as interim part-time chairman for a period of three months starting March 19.
WHAT HAS HAPPENED?
Chakraborty, who joined the board in May 2021, referred to “certain happenings and practices within the bank” over the past two years that were “not in congruence with my personal values and ethics”, prompting his decision to step down.
The wording of the resignation has drawn attention on Dalal Street, as such references to internal practices and governance standards are uncommon in exits at large private sector banks.
While Chakraborty did not elaborate on specific issues, his remarks have raised questions around internal processes at a time when HDFC Bank is still integrating its merger with HDFC Ltd.
The sharp fall in the stock also comes on a day when banking stocks were already under pressure due to broader market weakness triggered by rising crude oil prices and escalating geopolitical tensions in the Middle East.
However, HDFC Bank’s decline was steeper than peers, indicating a stock-specific reaction in addition to the broader sell-off.
Analysts said that while the development may not have an immediate impact on the bank’s operations, it could weigh on investor sentiment in the near term until further clarity emerges.
The appointment of Keki Mistry as interim chairman is seen as a stabilising move, given his long association with the HDFC group and familiarity with the institution.
WHAT INVESTORS SHOULD WATCH?
Going ahead, market participants are likely to watch for any further disclosures or clarifications from the bank regarding the concerns flagged in the resignation letter.
Any commentary from the management or regulators, particularly around governance practices, could influence near-term sentiment around the stock.
For now, the episode adds a layer of uncertainty for a lender that has otherwise been navigating a complex post-merger integration, even as broader market volatility continues to keep banking stocks under pressure.
– Ends
SOURCE :- TIMES OF INDIA
