Independent directors must act responsibly: Sebi chief

MUMBAI: Tuhin Kanta Pandey, chairman, Sebi on Monday said that independent directors are expected to act responsibly, not make insinuations and keep things vague. The chief markets regulator's comments came in the context of the recent resignation of Atanu Chakraborty as non-executive chairman of HDFC Bank, the largest private sector lender in the country.

The markets regulator will be looking at all the aspects of the matter to bring out the facts leading to the resignation of the non-executive chairperson.

Chakraborty, in the letter of resignation that came more than a year ahead of the scheduled end of his term at the bank, said that he was leaving because "certain happenings and practices within the bank" were "not in congruence" with his personal values and ethics. Chakraborty didn't elaborate on the details of the 'practices' and 'happenings' in the bank that he did not agree with.

Following the resignation of the chairman that came when the stock market was grappling with the impact of the war in West Asia, the HDFC Bank stock took a tumble. Since March 18, the night Chakraborty's resignation was announced by the bank, to its March 23 close at Rs 744 on BSE, the stock has lost 11.3%. In comparison, BSE's banking index has lost 7.3% while the PSU bank index has lost 5.2%.

The Sebi chief said that as per listing and disclosure rules of the stock exchanges, in case there are issues and ethical concerns, the same should have been in the minutes of the meeting. Independent directors hold very important positions and they have explicit powers to question the management, he said.

"No one is expected to make insinuations without proper evidence and recordings," the Sebi chief told reporters at the media meeting after the regulator had a board meeting earlier in the day. He said there are codes of conduct for independent directors and there are processes under the rules which such directors should follow. "We can't keep things vague," he said.

Pandey reminded that as per statutes, independent directors should act as the protectors of the interests of minority shareholders and should act 'responsibly'.

Since Chakraborty's resignation, the bank's market capitalisation has dipped by a little over Rs 1.5 lakh crore with its current value at Rs 11.4 lakh crore on BSE.



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