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Macquarie has removed HDFC Bank from its marquee buy list following the resignation of the lender’s part-time Chairman and Independent Director Atanu Chakraborty. The brokerage said that while the bank’s fundamentals remain strong, with healthy return on assets (ROA), near-term underperformance may persist as governance concerns weigh on sentiment. Read here

Brokerage firm Macquarie has removed HDFC Bank Ltd. from its marquee buy list. The brokerage has an ‘Outperform’ rating on the bank stock, and a price target of ₹1,200 per share.

More than ₹8,000 crore worth of shares of HDFC Bank have been traded so far, most on Nifty 500. The decline in stock price has wiped off ₹60,000 crore in market capitalisation today.

The Reserve Bank of India (RBI) said on HDFC Bank that, based on its periodic assessment, there are no material concerns on record with respect to conduct or governance, confirming a CNBC-TV18 newsbreak.

HDFC Bank remains a domestic systemically important bank (D-SIB) with sound financials.

The exit of HDFC Bank’s part-time Chairman Atanu Chakraborty is not linked to the bank’s conduct or any regulatory concern, top sources privy to the development have told CNBC-TV18. Read here

Brokerage firm JPMorgan maintained a “neutral” rating on HDFC Bank with a price target of ₹1,090, stating that Chakraborty’s exit adds to the macro headwinds, along with a hit to sentiment with elevated volatility in the near-term. “We believe that the stock is likely to trade weak following the resignation announcement, with impact further amplified by a softer macro backdrop amid geopolitical uncertainties.”

JPMorgan added that the reasons for resignation do raise some concerns about potential material disagreements between the board and the company’s leadership, risking board-management cohesion, and in-turn, future decision-making and execution.

Among the top management, executive director Bhavesh Zaveri’s term ends in April and he has not sought reappointment, as per the lender’s filing earlier this year. Zaveri is part of the promoter group at Aurionpro Solutions, who is a tech vendor to the bank.

Sources with knowledge of the matter told CNBC-TV18 that the RBI expressed discomfort with the continuation of Zaveri on the board of the lender.

Atanu Chakraborty had joined the board of HDFC Bank in May 2021, having been a secretary in the Ministry of Finance, an alternate governor on the World Bank Board and also a Chairman of the National Infrastructure Investment Fund (NIIF). He was a Gujarat Cadre IAS officer.

HDFC Bank is now trading at a current price-to-book of 2.3x, slipping below its Covid-era lows of 2.5x. On a one-year forward basis, the multiple has declined further to 2x, compared to 2.1x seen during the pandemic trough.

Dismissing speculation of internal rifts, Keki Mistry said there has been no power struggle within the board, even as he acknowledged that “human beings are human beings” and individual differences may exist.

He stressed that the board continues to function as a cohesive unit and added that he would not have taken up the role at the age of 71 if the bank’s systems and governance standards did not align with his values and integrity.

Following a board meeting in the evening, several directors met the Reserve Bank of India, after which the regulator approved Keki Mistry’s appointment at short notice. Mistry said this reflects the RBI’s comfort with the situation and confirmed that the regulator remains fully in the loop.

He added that the board will reconvene soon to decide the next steps, with discussions ongoing at multiple levels.

Keki Mistry said the board is not aware of any specific concerns flagged by Atanu Chakraborty in his resignation letter, adding that what prompted the communication “defies logic.” He said Chakraborty was asked during the board meeting to elaborate on any issues, but none were articulated.

Mistry emphasised that the board regularly conducts audits across functions and no governance lapses have come to its attention. He reiterated that there has been no power struggle within the board and described the functioning as cohesive.

Sashidhar Jagdishan said the bank remains committed to maintaining stakeholder trust over the long term. He added that engagements with the Reserve Bank of India have been constructive, with the regulator remaining supportive through ongoing supervision.

Mistry emphasised that the institution continues to be anchored in transparency, integrity and long-term value creation. He added that the board remains committed to safeguarding institutional resilience through the transition. The interim chairman said he would not have taken on the role if it did not align with his principles, reaffirming confidence in the bank’s governance and internal strength.

The board of HDFC Bank said that the merger has enhanced the lender’s scale and presence, while strategic direction and business priorities remain unchanged. Management reiterated its focus on building a strong, long-term legacy.

Keki Mistry said the board has not identified any material issues, with oversight remaining fully operational. He added that disclosures have been complete and transparent, in line with regulatory requirements.

Chakraborty thanked the bank’s independent directors, saying that there is a great amount of energy and verve in the middle and junior levels of the bank. “(This) should form the core of a reimaged organization. I also place on record my sincere appreciation for Secretarial, Compliance, Audit, and Group oversight functions,” Chakraborty’s letter stated.

In his resignation letter, Chakraborty wrote that certain happenings and practices within the bank that he observed over the last two years were not in congruence with his personal values and ethics. “This is the basis of my aforementioned decision,” he wrote.

HDFC Bank shares declined as much as 9% today, after its part-time Chairman and independent director, Atanu Chakraborty quit and Keki Mistry, the former CEO of HDFC Ltd., was appointed as the interim part-time chairman, with approval from the Reserve Bank of India.

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