RESIGNATION OF INDEPENDENT DIRECTOR HAS RESULTED IN HDFC BANK SHARE PRICE DROP BY 8.7% AND RS 1 LAKH CRORE OF INVESTORS WEALTH AND US-LISTED AMERICAN DEPOSITORY RECEIPTS FELL BY MORE THAN 7% OVERNIGHT-

 RESIGNATION OF INDEPENDENT DIRECTOR HAS RESULTED IN HDFC BANK SHARE PRICE DROP BY 8.7% AND RS 1 LAKH CRORE OF INVESTORS WEALTH AND US-LISTED AMERICAN DEPOSITORY RECEIPTS FELL BY MORE THAN 7% OVERNIGHT-

SEBI’S STATEMENT

SEBI released a statement in the wake of the sudden resignation by one of the independent directors of the HDFC Bank that the ‘Independent directors need to act responsibly, and back up any insinuations with evidence.’

HEAVY FINANCIAL LOSS TO SHAREHOLDERS

The fierce consequence of such resignation was steep loss borne by investors when, after the resignation, HDFC Bank’s shares reported to drop as much as 8.7%, which was the steepest fall in more than two years. Similarly, the US-listed American Depository Receipts fell by more than 7% overnight, wiping out more than Rs 1 lakh crore of investors wealth within hours and raising questions about governance at India’s largest private lender.

SHATTERS THE CONFIDENCE OF INVESTORS

This naturally leads us to question the faith and trust placed in the mechanism of independent directors on the board of companies, which was introduced to ensure improved corporate governance, both by the legislature and the regulator. 

REASONS CITED FOR RESIGNATION

Atanu Chakraborty, the Part-time Chairman and Independent Director of HDFC Bank, resigned on March 18, 2026, citing a misalignment between the bank’s practices and his personal values and ethics.

Atanu Chakraborty, resigning independent director in HDFC Bank was troubled by ‘certain happenings and practices’ within the bank that were not in alignment with his personal values and ethics, without specifying precise reasons.

This may be indicative of the prevalence of a systemic pattern of questionable practices and happenings in HDFC.

WHY ATANU CHAKRABORTY NOT REGISTERED HIS CONCERNS IN MINUTES OF  EARLIER HDFC BOARD MEETINGS?

It clearly marks the ineffectiveness of the statutory scheme pertaining to independent directors, as the Companies Act, 2013 requires such directors to ensure that their concerns about the running of a company are recorded in the minutes of the board meeting.

INSTANCES OF EARLIER INDEPENDENT DIRECTORS RESIGNATION CITING AGAINST PERSONAL VALUES AND ETHICS

2024	The Bombay Burma Trading Corporation Ltd
2025	Hardwyn India Ltd
2025	Gensol Engineering Limited (GEL)
2025	Waree Energies Ltd

ATANU CHAKRABORTY WAS A SILENT OBSERVER IN THE PAST TWO YEARS OF ID OF HDFC BANK

Such generalized reasons mask the disclosure of real causes of resignations and lead to information asymmetry for investors when their primary duty to ensure transparency to protect the interests of minority shareholders. In the present case, the independent director, by his very account, observed the lapses for two whole years before resigning, and even after failed to articulate precisely what those lapses were.

SEBI REGULATION 30 REQUIRES TO REVEAL REAL REASONS

SEBI in its Regulation 30 read with Schedule III, Part A, Para A(7B and C) of Regulations, 2015 of Listing Obligations and Disclosure Requirements has mandated resigning directors to mention that the reasons specified in their resignations are the real reasons behind their resignations and that there are no other hidden reasons that compelled them to resign.

TO BE RATIFIED BY INDEPENDENT DIRECTOR

Companies Act on independent directors is indicated by the fact that in case decisions taken at any Board meeting in absence of independent directors, decision is required to be circulated to all directors and will be confirmed only if it is ratified by at least one independent director.

AUDIT COMMITTEE

Audit committee should have majority of independent directors. The audit committee is the most important committee that can inquire for internal control systems from the auditors and review financial statements before submission to the Board.

NOMINATION AND REMUNERATION COMMITTEE

Nomination and Remuneration Committee should have at least half of non-executive directors to be as independent directors.

WHETHER ATANU CHAKRABORTY RESIGNATION AS INDEPENDENT DIRECTOR FROM HDFC BANK BOARD INDICATES TO LOOK FOR SOME ALTERNATIVES IN PLACE OF INDEPENDENT DIRECTORS?

Given the trust imposed on independent directors by the Companies Act, such resignations have serious questions whether we should continue depending upon presence of independent directors in companies or we identify some alternatives in addition to such reliance. Sufficient evidence is available indicating that that it is time for serious reconsideration rather than being reactive to such failures.

Courtesy : Dr Harpreet Kaur, Times of India

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,