Mumbai: Former HDFC Bank chairman Atanu Chakraborty on Monday hinted that the “mis-selling” of Credit Suisse’s perpetual bonds was a bone of contention between him and the bank's management.
Chakraborty, who stepped down on 18 March, told CNBC TV18 in an interview that while he typically avoids sharing any boardroom discussions, in this case, the issue had been discussed in public by chief executive Sashidhar Jagdishan. In his 17 March resignation letter, he had cited “certain happenings and practices” at the bank that were “not in congruence” with his personal values and ethics.
Jagdishan had told The Economic Times on 23 March that HDFC Bank operates in West Asia through branches in Dubai. Bahrain customer engagement typically happens in Dubai, while transactions are booked in Bahrain. In June 2023, the Dubai Financial Services Authority clarified that clients who are continuously engaged in Dubai must also be onboarded there, even if accounts are booked in Bahrain. This issue surfaced after losses on Credit Suisse AT1 bonds.
“Our assessment is that this was a technical lapse in documentation and regulatory interpretation, not fraud or mis-selling,” according to Jagdishan.
On Monday, Chakraborty said he feels that if a large number of customers are hurt, some amount of regulatory or rather a large amount of regulatory focus has come on the bank.
“It also brings reputational risk to the bank. Therefore, while the issues have been addressed, there has been involuntary separation of three seniors that has been reported, as well as 12 other people punished from major penalties to minor penalties,” he said.
“They are all at very senior levels. But they are a posteriori reactions. Something goes on for eight years, and suddenly we take action. People will say those are concerns addressed, go home, perhaps, and that's it.”
The bank had informed the exchanges on 26 September 2025 that the Dubai Financial Services Authority barred the bank’s DIFC branch from conducting any business with new clients.
On 23 March, HDFC Bank said the governance, nomination and remuneration committee (GNRC) directed an internal investigation. Thereafter, the GNRC pronounced staff accountability actions against a few employees on 9 March, including the removal of these three employees from the services of the bank.
“I feel that these conduct issues should not arise in the first place, or the tight supervision should ensure that even if they arise, they are nipped in the bud. However, if they are termed as technical, it leaves a little bit of a leeway,” said Chakraborty.
Asked if he believes there are larger governance issues at HDFC Bank that require being addressed, Chakraborty said that he does not wish to discuss other matters unless they are in public.
“Ideally, events should not occur,” said Chakraborty, adding that he does not mean that in a large system, events will not occur; however, the incentive structures, the oversight of the management and the board, should ensure that they are aligned with the interests of depositors, shareholders and public at large.
Since Chakraborty’s sudden resignation, the bank has been busy assuaging investor concerns and trying to get to the bottom of the issue. Mint reported on 24 March that HDFC Bank was likely to appoint at least two law firms, Wadia Ghandy & Co, and Trilegal, to conduct a review of the circumstances leading to former chairman Chakraborty’s exit.
These law firms have been tasked with aiding the bank’s internal legal counsels to sift through pages of minutes of past board meetings to see if Chakraborty had made any serious observations.
The bank’s board and the management maintained they had no inkling of Chakraborty’s exit, and he did not specify what he was referring to as part of his ethical concerns despite being asked repeatedly.
