Mumbai-based law firms Trilegal and Wadia Ghandy & Co are poised to report that they have found no major governance lapses at HDFC Bank this month. These findings are expected to clear the path for the reappointment of CEO Sashidhar Jagdishan. HDFC Bank, India’s largest private lender by assets, provides a comprehensive range of financial products and services. With 120 million customers and just over a tenth of the nation’s banking deposits, its stability is critical to the broader economy. The review was prompted after former chairman Atanu Chakraborty resigned in March, citing an “incongruence” between his personal values and bank practices.
Chakraborty’s unelaborated departure led to a 13.81% drop in the bank’s share price, equating to a $16 billion reduction in value. This market reaction prompted the Reserve Bank of India (RBI) to issue a rare statement aimed at allaying investor and depositor concerns regarding the institution, which is deemed too big to fail. HDFC Bank shares extended gains by as much as 3.1% to 796.95 rupees following initial reports of the review’s findings, before slightly easing.
The engaged law firms reportedly examined minutes and video recordings of board and extraordinary general meetings over the past three years. Sources with direct knowledge of the review indicate that all issues raised at board level were handled according to prescribed processes, without further elaboration on the specific issues. The central bank, which is responsible for approving lenders’ CEO appointments, has previously stated that based on its periodical assessment, there are “no material concerns on record as regards its conduct or governance” at HDFC Bank. The law firms are expected to submit their report to the board this month, which will then forward it to the RBI, supporting the proposed reappointment.
