HDFC Bank stock selloff halts after 4 days, rises 3%. What's happening?

Shares of HDFC Bank, India’s largest private lender, rose as much as 3.2% to an intraday high of Rs 768 on the BSE on Tuesday, breaking a four-session losing streak during which the stock had declined 12%.

The private lender announced the appointment of external law firms to review former part-time Chairman Atanu Chakraborty’s resignation, which had led to a massive share sell-off that wiped off around Rs 1.6 lakh crore from the bank’s market value in just three sessions.

The stock has fallen 12% in four days after the chairman’s resignation sparked concerns about possible trouble at India’s largest private lender. Chakraborty submitted his resignation on March 18, stating that some practices within the bank were not matching with his personal values and ethics.


“Certain happenings and practices within the bank that I have observed over the last two years are not in congruence with my personal values and ethics. This is the basis of my aforementioned decision. I confirm that there are no other material reasons for my resignation other than those stated above,” Chakraborty wrote in his resignation letter.

Keki Mistry, meanwhile, was appointed as an interim part-time chairman for a period of three months, as approved by the RBI.

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After Chakraborty’s resignation drew massive media attention, Mistry denied speculation around any internal power struggle. “There was no power struggle in the bank. Differences on minor issues come up from time to time. There was no material difference between Atanu and the board,” he said during a conference call. The RBI said there are no material concerns regarding the lender’s governance or conduct. “We confirm that there are no reasons other than those mentioned in the said letter for the resignation of Mr Chakraborty,” the lender clarified.

Later, reports suggested that HDFC Bank has fired its group head of retail branch banking, Sampath Kumar, along with two other senior executives over alleged mis-selling of Credit Suisse’s additional tier-1 (AT-1) bonds. The bank issued a clarification, confirming that the employees were indeed removed.

Earlier on Monday, Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey emphasised that independent directors must act responsibly and avoid making unsubstantiated claims. “Independent directors are expected to act responsibly,” Pandey said, underlining the importance of their fiduciary duties.

Addressing the nature of Chakraborty’s exit, Pandey cautioned against making insinuations without adequate evidence. He further added that vague statements can create unnecessary uncertainty in the market.

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