HDFC Bank Review Reveals No Major Governance Issues Post-Chairman's Exit, Sources Report

• Two law firms (Trilegal and Wadia Ghandy & Co) reviewed three years of board meetings and found all governance issues were handled per prescribed processes, with reports expected this month
• HDFC Bank stock has underperformed since its $40 billion merger with HDFC Ltd in 2023, down 5% versus rival ICICI Bank's 33% gain
• The Reserve Bank of India previously stated there are 'no material concerns' regarding the bank's conduct or governance, and sources say the RBI sees no issues precluding the CEO's reappointment

HDFC Bank Governance Review Finds No Major Issues Following Chairman's Abrupt Exit

Independent law firms reviewing HDFC Bank's governance practices are expected to report this month that no major lapses were found, clearing the path for CEO reappointment, according to sources with direct knowledge of the findings.

Key Developments:

India's largest private lender by assets engaged Mumbai-based law firms Trilegal and Wadia Ghandy & Co after Chairman Atanu Chakraborty resigned in March, citing "incongruence" between his personal values and bank practices without elaboration. The unexpected departure triggered a 13.81% stock plunge and prompted a stabilizing statement from the Reserve Bank of India (RBI).

Review Details:

The law firms examined board minutes and video recordings from the past three years to determine whether governance issues were raised and properly addressed. Sources confirmed that all board-level issues were handled according to prescribed processes.

Market Impact:

HDFC Bank, with 120 million customers and over 10% of banking deposits, is systemically important and majority foreign-owned. The stock has declined 5% since its $40 billion merger with parent HDFC Ltd in 2023, significantly underperforming rival ICICI Bank (up 33%) and the Nifty 50 benchmark (up 24%).

Next Steps:

Following the clean report, HDFC Bank will propose CEO Sashidhar Jagdishan for reappointment after his three-year term ends in October. The RBI must approve the appointment, with sources indicating the central bank sees no issues that would preclude reappointment. The RBI previously stated there were "no material concerns" regarding the bank's conduct or governance.

The findings are expected to restore certainty for a bank whose stability is critical to India's economy.