The Securities and Exchange Board of India (Sebi) chairman Tuhin Kanta Pandey on Monday said that the regulator will look into the board meeting minutes of HDFC Bank, following the surprise exit of non-executive chairman Atanu Chakraborty.
“We have to see what is there in the governance, in their board meetings,” said Pandey, responding to a question on whether the market regulator was probing into the matter.
Pandey also cautioned independent directors against making unsubstantiated remarks, stressing that any concerns must be backed by evidence and properly recorded.
Chakraborty, in his resignation, had cited concerns related to “ethics and values”.
However, the Reserve Bank of India (RBI) subsequently stated that it had not found any material governance issues at the bank based on its periodic assessments.
Shares of HDFC Bank have declined nearly 12 per cent since Chakraborty’s exit, leading to market cap erosion of over Rs 1.5 trillion.
Referring to the regulatory framework, Pandey said independent directors must exercise restraint. “Nobody is expected to make any insinuations without proper evidence and recording. Such comments can impact minority shareholders’ interests,” he said.
He added that under the Listing Obligations and Disclosure Requirements (LODR) Regulations, independent directors are required to ensure that their concerns on the functioning of the company or specific decisions are addressed by the board. If unresolved, such concerns must be formally recorded in the board minutes.
Pandey emphasised that independent directors hold a critical role in corporate governance, with the responsibility to question management where necessary and safeguard minority shareholder interests.
The Reserve Bank of India had said HDFC Bank, a Domestic Systemically Important Bank (D-SIB) with sound financials, is professionally run board and competent management team. “Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance,” RBI had said adding the bank remains well-capitalized and the financial position of the bank remains satisfactory with sufficient liquidity.
The banking regulator also approved a transition arrangement, appointing Keki Mistry as part-time chairman for three months.
