HDFC Bank senior management backs Keki Mistry to continue as chairman

Mumbai: After the sudden exit of former part-time chairman Atanu Chakraborty, the senior management of HDFC Bank remains hopeful that the appointment of Keki Mistry as interim part-time chairman could extend beyond the timeline of three months, managing director and chief executive officer Sashidhar Jagdishan said on Saturday.

While there is support within the executive leadership for HDFC Bank veteran Mistry’s continuation, the final call rests with the board, and its nomination and remuneration committee (NRC), Jagdishan said during the March quarter earnings call of the bank on 18 April.

“We are all rooting for Mr. Mistry… but… there are certain processes that we need to conclude before we can even put forth for deliberation in the NRC and at the board,” Jagdishan said, adding that the outcome remains open-ended.

Chakraborty, who resigned on 18 March, citing “certain happenings and practices within the bank” that were “not in congruence” with his personal values and ethics had prompted questions on oversight and internal controls at the country's largest private bank.

Following his resignation, HDFC Bank, in a late-night announcement, said the Reserve Bank of India (RBI) had approved the appointment of board member and HDFC Group veteran Keki Mistry as an interim part-time chairman for three months from 19 March. A veteran within the HDFC ecosystem, Mistry’s temporary elevation was seen as a stabilising move.

However, with that interim window nearing its end, the focus has shifted to who will take on the role permanently.

To reinforce the robust governance standards of the bank, the board had approved the appointment of external law firms to conduct review regarding Chakraborty’s resignation letter as he had did not mention any happenings and practices which were not in congruence with his personal values and ethics. To that, Jagdishan said that the legal review is in process and as and when the process is completed, the bank will provide a summary of the same.

The leadership transition comes at a time when the bank is also managing parallel developments. Addressing the Dubai AT1 bond-related matter, management said that the 23 March order by the National Consumer Disputes Redressal Commission (NCDRC) stated that the complainants were not retail or uninformed investors but had a clear intent to pursue high-yield, high-risk investment products. The bank also clarified that India is not the jurisdiction for that complaint, suggesting the issue may proceed in overseas courts.

Even as governance questions remain in focus, the bank’s operating performance continues to show resilience. For the quarter ended March, the bank’s loan growth rose by 12% on year to ₹3.17 trillion, higher than 5.4% on year growth witnessed in the previous year. Deposits continued to outpace credit at ₹3.91 trillion, up over 14% on year.

When asked if the management continues on its glide path to exceed industry credit growth levels for FY27, Jagdishan refrained from giving any numerical outlook due to uncertainties arising from the ongoing West Asia war but said the positive momentum would continue.

While acknowledging a marginal impact from the geopolitical situation, management said the effect is likely to be limited, though certain medium, micro, and small enterprise segments may face temporary stress.

On margins, the management expects net interest margin of the bank to remain range-bound in the near-term. In Q4, the bank’s NIM was 3.38%, up from 3.35% a quarter ago. Net interest income of the bank rose over 3% on year and 1% on quarter to ₹33,080 crore.

Overall, improvement in asset quality, lower provisions and strong loan growth lifted the lender’s net profit at ₹19,220 crore, up over 9% on year and 3% on quarter, higher than expectations of ₹19,053 crore PAT estimated by Bloomberg.