HDFC Bank AGM Aims At Calming Investors And Customers, But Serious Questions Remain

But internally, things are still on the boil. Sources said that anxiety among employees has risen with a host of uncomfortable issues coming to the fore amid a flurry of social media posts on the bank’s declining financial health.

According to a senior executive, laptops of senior officials in the control and assurance functions team were taken away, and the data was deleted.

The bank's control and assurance functions team primarily deals with governance issues and maintains a strict watch on compliance. Its key responsibility is to ensure there are no conflicts of interest.

“We do not know why this was done, but these do raise serious questions, and they leave a bad taste. This is a serious breach of conduct,” an employee of the bank told The Secretariat.

The bank did not respond to The Secretariat’s email, phone calls, or messages.

MSRDC Deposits Issue

Interestingly, just ahead of the AGM, the bank, which set up an internal probe to review discrepancies related to the ₹45 crore Maharashtra State Road Development Corporation (MSRDC) deposits and transactions case, closed the matter immediately after the report highlighted that it was merely due to "business overreach."

The report concluded that there was no mala fide intent. Sources said that the closure of the matter sets the stage for Jagdishan’s reappointment, which has been in the news for some time now. 

Jagdishan, along with Srinivasan Vaidyanathan, Chief Financial Officer, and Arvind Vohra, Group Head of Retail Assets, were slapped with a fine of just ₹1 lakh each for the MSRDC deposit issue.   

Many eyebrows were raised following the bank’s “mild” and “eye-washing” punitive action.

The lacklustre reaction from the Reserve Bank of India (RBI) has also come to the notice of many. A section of the employees feels that the hurried closure of the case was aimed at paving the way for Jagdishan’s reappointment.

“RBI is the regulator, and one would have expected a much stronger action from it; when that doesn’t happen, there will be murmurs of unfair play,” an executive of the bank said.

Jagdishan’s term expires later this year on October 26.

Sources said that the nomination and remuneration committee (NRC), which played almost no role in the investigation, will take up the issue of reappointment of Jagdishan.

Meanwhile, in June, the HDFC Bank board announced the appointment of former Finance Secretary Rajiv Kumar as its Part-Time Chairman. The post was lying vacant since the sudden resignation of Atanu Chakraborty, who served as Part-Time Chairman from May 2021 till March 18, 2026.

“There are no governance-related concerns at the systemic level,” Kumar, who addressed the AGM, said.

“Let me reiterate, on my behalf and on behalf of the board, that the bank is fundamentally strong, with a pristine balance sheet,” he said, adding that for large institutions like HDFC Bank, such issues could pop up once in a while. What is important is timely and transparent redressal of such matters.

Controversies Surrounding HDFC Bank

Without elaborating, Chakraborty, in his resignation letter, had said that certain practices in the bank were not in “congruence” with his “personal values and ethics.”

Following his resignation, the bank board engaged external legal firms, Wilson Sonsini Goodrich & Rosati, P C and Wadia Ghandy & Co, to look into his allegations. On June 26, the report was made public. It gave a clean chit to the bank board and said there was no evidence to support the concerns raised by the former Chairman.

The bank has been embroiled in a series of controversies. Last year, the Dubai Financial Services Authority took strict action against the bank. The allegations? Mis-selling Credit Suisse’s additional tier 1 bonds to non-resident Indians in Dubai. Following this, the bank was forced to sack three of its senior management members, though initially the issue was dismissed as a technical lapse.

Exactly a year ago, HDFC Bank stock was trading at around ₹990 a piece. On August 6, the price was about ₹734.

The HDFC episode needs a thorough and honest review. The series of lapses only reflects a deeper structural lacuna that runs across the country’s banking sector.