Mumbai: India’s largest private sector lender HDFC Bank is likely to appoint at least two law firms, Wadia Ghandy & Co, and Trilegal, to conduct a review of the circumstances leading to former chairman Atanu Chakraborty’s sudden exit last week, said two people aware of the matter.
These law firms have been tasked with aiding the bank’s internal legal counsels to sift through pages of minutes of past board meetings to see if Chakraborty had made any serious observations, according to one of the two people cited above. The bank’s board and the management maintained they had no inkling of Chakraborty’s exit, and he did not specify what he was referring to as part of his ethical concerns despite being asked repeatedly.
Earlier on Tuesday morning, the bank said its board approved the appointment of external law firms to conduct a review of Chakraborty’s resignation letter. The names of the law firms were not disclosed in the regulatory filing.
The bank reiterated on Monday that “Chakraborty did not mention any happenings and practices which were not in congruence with his personal values and ethics.”
“These law firms will look at the board meeting minutes to see if the bank missed anything,” said one of the people cited earlier.
A spokesperson for HDFC Bank said in a statement that the appointment of external law firms is a proactive measure taken by the bank to independently look at the aspects mentioned in the letter to ensure an objective and fact-based assessment.
Emails sent to Trilegal, and Wadia Ghandy & Co remained unanswered till press time.
In an interview on Sunday, when Mint asked executive Sashidhar Jagdishan about HDFC Bank's plans to appoint an external auditor or a board committee to investigate the matter, he said the board is going to meet more frequently to try and see what are the things that it needs to do.
“My hunch tells me that we will take some proactive measures to be able to assess whether there are things that we need to tighten, we need to enhance and be more proactive about it rather than wait for any new or potential issues in the future,” said Jagdishan.
On 18 March, HDFC Bank said Chakraborty had resigned with immediate effect, citing in his letter from 17 March to the board “certain happenings and practices within the bank” that were “not in congruence” with his personal values and ethics.
In a late-night announcement, the lender said that the Reserve Bank of India (RBI) on Wednesday approved the appointment of board member and HDFC group veteran Keki Mistry as an interim part-time chairman for three months from 19 March.
The bank got immediate backing from the RBI, which said on 19 March that, based on its periodical assessment, there are no material concerns on record as regards its conduct or governance. “The bank remains well-capitalized and the financial position of the bank remains satisfactory with sufficient liquidity,” the regulator said in a statement.
India’s markets regulator was not far behind, although not saying anything directly. Mint reported on 23 March that Securities and Exchange Board of India (Sebi) chairman Tuhin Kanta Pandey said that if there are concerns, they must be explicitly disclosed and substantiated rather than left to insinuations.
“When they say such a thing, it is important to give a reason. Nobody is expected to make any insinuations without proper evidence and recording…as it has an impact,” Pandey said at a press conference following its board meeting.