India’s market regulator is working on a collaborative framework with corporates, academia and professional bodies to expand the pipeline and effectiveness of independent directors, even as recent boardroom tensions at HDFC Bank sharpen scrutiny on governance standards.
“Sebi will seek to embark on a joint initiative for capacity building of independent directors at scale with a view to further improve corporate governance,” Sebi chief Tuhin Kanta Pandey said at the 19th Governance Summit hosted by the Confederation of Indian industries (CII) on Monday.
“Boards are well constituted, but not always equally effective. Information is available but not always interrogated deeply. Independence exists in form, but may not always translate into an independent perspective,” he added.
The proposed initiative, still taking shape, will bring together industry, academic institutions and professional bodies to expand both the supply and capabilities of independent directors. Pandey said the goal is no longer formal compliance but depth and effectiveness.
Murmurs at HDFC Bank
The push comes at a time when boardroom dynamics are under scrutiny following the abrupt resignation of Atanu Chakraborty as non-executive chairman and independent director of HDFC Bank. Chakraborty stepped down in March citing “certain happenings and practices” that were not aligned with his personal values and ethics, triggering questions about how dissent is expressed and recorded within boards.
The Sebi chairman, following the regulator’s board meeting in March, said it was important for independent directors to elaborate on their concerns, if any, in company board meetings rather than leaving their positions ambiguous.
Chakraborty, who joined the bank’s board in 2021 and oversaw its merger with HDFC Ltd, later indicated that the alleged mis-selling of Credit Suisse’s perpetual bonds may have been a point of disagreement with management. While he refrained from divulging detailed boardroom discussions, the episode renewed the debate over how effectively independent directors can challenge management decisions in complex, high-stakes environments.
Pandey said building capacity was crucial for improving this framework. “Capacity building cannot be mandated in a prescriptive manner. But it can certainly be encouraged, enabled and supported through collaboration between regulators, industry bodies, professional bodies and academic business institutions,” he said.