Atanu Chakraborty rebuts HDFC MD, flags ‘deeper governance issues’ behind exit

MUMBAI: Former HDFC Bank chairman Atanu Chakraborty, who quit the bank’s board on March 18, citing “incongruence” between his values and certain internal practices, has disputed managing director Sashidhar Jagdishan’s claim that action against staff over the sale of high-risk bonds to Gulf customers was unrelated to the boardroom dispute.

In an interview to CNBC, Chakraborty said, “The incentive structures and the oversight of the management and the board should ensure that they are aligned with the interests of depositors, shareholders, and the public at large.”

‘Letter mentions larger governance issue’

Jagadishan, in an interview to TOI, had said that the action against employees over the AT-1 bond issue in the Gulf coincidentally took place at the same time as the boardroom dispute and had nothing to do with the chairman’s exit.

HDFC Bank had responded to Chakraborty’s resignation letter by appointing law firms to look into the issues. “Appointing law firms is more of a compliance requirement; my letter mentions a larger governance issue,” said Chakraborty, indicating that the bank has not acted upon his letter.

Expressing dissatisfaction over the action taken by the bank, he said, “Something went on for eight years, and suddenly we take action.”

“If you are addressing concerns like a five-page post-audit report, why should those things arise in the first place? Who will ensure that it will never happen again? The rest otherwise becomes ticking the box. What I am saying is improve the thinking level and root your ethics and values. I find it strange that people are asking me to describe my concern on values and ethics,” he said.

“We do not dig wells after the fire has taken place. There needs to be avoidance of risky practices. There has been share underperformance, low CASA, and a low-income ratio,” he added.

Chakraborty denied there was any issue over the reappointment of Jagdishan. “The matter of Sashidhar Jagdishan’s reappointment had not even come to the board for us to look into performance or any issues; how could there be differences about something that had not even been discussed?” He also indicated that the issue of relationships had been overblown. “Personality issues have been overblown,” he said.

The former chairman rejected suggestions that his letter had resulted in a loss of value for HDFC Bank. “I completely refute that there was value erosion on account of my resignation,” he said. He added that the sensex had declined due to the Iran conflict and disappointment over the Fed’s statement.

Chakraborty said there were no insinuations in the letter. “I have only referred to what is in the public domain; if someone is using the word insinuation for my letter, they need to read the dictionary.” In the interview, the retired civil servant reiterated that he had resigned due to a lack of alignment on ethics and values.

“Addressing underperformance is part of the duty of independent directors,” he said.

“The benefits of the merger with parent HDFC, the biggest of its kind, are yet to fully fructify,” he added.
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