Following the resignation of Atanu Chakraborty as part-time chairman of HDFC Bank, the lender’s leadership has moved to address stakeholder concerns. The management and board, comprising Managing Director and Chief Executive Officer (CEO) Sashidhar Jagdishan; Deputy Managing Director Kaizad M Bharucha; Executive Directors Bhavesh Zaveri and V Srinivasa Rangan; Interim Part-Time Chairman Keki Mistry; and other board members talked to the media on the bank’s governance, stability, and direction. Edited excerpts:
Did the board ask Chakraborty to reconsider the language in his letter of resignation?
Mistry: Chakraborty was asked by board members about his specific complaints or concerns, but he said that there were none.
What will the bank do about the reputation factor this incident has brought in?
Mistry: As the management team and board, we stand united. The management will be speaking to all major shareholders during the next one or two days. Whatever fears are there in people’s mind will be addressed. I don’t believe that there is any governance-related issue in the bank. Getting the trust of investors back is a matter of time and I am sure people will understand. The Reserve Bank of India (RBI) has issued a clarification in which it has expressed satisfaction with the way the bank is being run.
In such a time, can the board afford to have a different CEO?
Mistry: The nomination and remuneration committee will meet in a month or so and put in its recommendation (on a fresh term for the CEO), which will be approved by the board and sent to the RBI.
On the matter of Chakraborty’s resignation, the word “baffling” was used. Does that indicate a failure of internal communication at the highest level?
Mistry: The reason the word was used is that we have not understood what led to this kind of a reaction from the chairman. There are routine issues that happen in every large organisation, but there is nothing else from the governance standpoint. The HDFC group stands for governance — the single-most important priority we have attached to our businesses and to our companies. Governance and ethics are above everything else.
Did the RBI seek clarification from the bank after the resignation?
Jagdishan: Two wholetime members and two independent directors yesterday (Wednesday) briefed the RBI on the matter. The RBI has been supportive and the testimony to this is that it gave approval to the appointment of the new interim part-time chairman quickly. This is because it has a fair measure of confidence and support in the institution. The RBI followed up today (Thursday) with a statement. This should give comfort to investors, domestic and global.
Is there any issue bank wants to correct later? Or there is no issue at all?
Mistry: There is no issue that the RBI has flagged and told us to address.
Jagdishan: Being a large institution and an important institution in the banking system, we are subject to regulatory supervision, both offsite and onsite. Not just inspection, there are regular thematic supervisions by the RBI, a primary regulator, and some ancillary regulators.
When you look at this comprehensively and the intensity at which these levels of supervision come, we, on the board and in management, believe there should not be any surprises and we are reasonably confident about the rigour, ethos, and confidence with which our controls are working. As of now, I think we are sanguine about where we stand and what we have been saying all along since morning (Thursday). That has been complemented and supplemented by even the regulatory notification.
Has there been any assessment as to how this can affect deposit mobilisation? Or can it lead to a flight in deposits?
Mistry: We monitor deposits all the time. There is no governance issue in the bank from a financial perspective and, for that matter, from any perspective. And therefore to my mind, the deposit-mobilisation plan is on schedule and it’s something the board will keep managing.
Would you look at internal or external candidates for the post of managing director and CEO?
Mistry: As far as the senior management is concerned, there is a regular process in the nomination and remuneration committee. There each position — who would be there and who would replace whom — is discussed. This is a big bank with a large number of people. We are a big group if you look at the life insurance, the general insurance, and the asset management businesses. Obviously, if there is some talent within the organisation and that’s something I’m sure the committee will look at. But there is no immediate plan at this point in time.
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