For the first time after his exit on March 18, former HDFC Bank Chairman Atanu Chakraborty opened up about reasons behind his decision to step down from his post. Chakraborty reflected on it in an interview with CNBC-TV18, saying his decision was not triggered by a single event, but it was the culmination of a simmering sense of “incongruence” over the past two years.

A former bureaucrat, Chakraborty had joined the bank’s board nearly five years ago as a non-executive, independent chairman. He occupied a position that was part of one of the most transformative phases in the HDFC’s history—including its landmark merger with HDFC Ltd, the monetisation of Credila, and the IPO of HDB Financial Services.

His resignation resulted in the bank’s shares falling sharply even as questions persist over what triggered the move and whether it points to deeper governance concerns.

Chakraborty says his resignation letter was self-explanatory, as it described an “incongruence” between his value framework and the bank’s approach. He adds that it was when such a “dilemma’ arose that made him take a decision.

Though he refrained from sharing information about the boardroom discussions, he pointed to a specific episode that had already entered the public domain—issues flagged in the bank’s Dubai operations, dating back to 2018, involving customer onboarding and conduct lapses that drew regulatory scrutiny both domestically and overseas.

Chakraborty cites delays in taking corrective measures related to accountability as one major reason, saying that penalties against officials involved in the mis-selling of AT1 bonds in Dubai in September last year came several years after the lapses occurred, raising questions over the timeliness of corrective action.

He says that though the institution executed big-ticket strategic actions, deeper discomfort was building beneath the surface.

According to the CNBC report, at the heart of his resignation laid what he repeatedly described as a mismatch of frameworks. It was “incongruence” between his own understanding of values, ethics, and governance and the interpretation or prioritisation of those within the bank that led him to decide to quit.

The distinction between reactive correction and proactive ethical alignment appears central to his unease that finally led to his exit from the bank.

While seeking to dispel speculation that leadership continuity may have been a factor behind his exit, Chakraborty says that the question of CEO Sashidhar Jagdishan’s reappointment was never discussed during his tenure. He clarified that personality differences had been overstated and were not a determining factor in his decision to step down. The issues, he suggested, ran deeper than individual equations.

At the core of his concerns was the alignment of governance structures. Incentive frameworks and oversight of management and board-level decision-making, he said, must remain firmly anchored to the interests of depositors—a principle that assumes greater significance in the banking sector, where public trust is paramount. 

Chakraborty’s thinking is clear: for an independent director, the mandate goes beyond oversight of performance metrics and extends into safeguarding probity, ensuring transparency, and aligning business conduct with the long-term interests of depositors and shareholders. He talks about the importance of public trust in the banking business, saying these are not abstract ideals but operational imperatives.

Chakraborty raises a basic question to explain his thinking when he points out that post-facto disciplinary actions — including exits and penalties for senior officials—while necessary, do not address the more fundamental question: why were such issues not prevented or “nipped in the bud” in the first place?

According to him, when customer impact is widespread and regulatory attention sustained, the matter transcends technicalities and enters the realm of conduct and culture.