BANKING ON MISTRY

THE SUDDEN RESIGNATION OF PART-TIME CHAIRMAN ATANU CHAKRABORTY HAS SENT SHOCKWAVES. THE INTERIM CHAIRMAN, KEKI MISTRY, WILL HAVE TO ENSURE TRANSPARENCY ON ISSUES RAISED BY CHAKRABORTY WHILE PROVIDING CLARITY ON KEY LEADERSHIP POSITIONS, INCLUDING THE REAPPOINTMENT OF MD & CEO SASHIDHAR JAGDISHAN

- BY NACHIKET KELKAR

KEKI MISTRY, WHO stepped down as Vice Chairman and CEO of Housing Development Finance Corp (HDFC) following its merger with HDFC Bank two years ago, has been hoisted back into the hot seat at the country's most valued lender following the sudden resignation of part-time chairman Atanu Chakraborty.

Mistry, as interim chairman, will have to restore confidence among shareholders, accountholders and the financial market community. Chakraborty's resignation letter had cited differences over values and ethics. “Certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal values and ethics. This is the basis of my aforementioned decision,” he wrote in his resignation letter, disclosed by the bank in a late stock exchange filing on March 18. He said there were no other material reasons for his decision.

“Given the specific context of a bank, that too India's largest private sector bank, these words carry weight. Banks are by nature opaque and leveraged. The near-automatic instinct to assume the worst is understandable,” says Santanu Chakrabarti, Director and Head of Research for Banking and Financial Services at BNP Paribas Securities India.

At the March 18 board meeting where Chakraborty quit, some members tried to persuade him to elaborate his concerns or change some of the language of his resignation letter. After the meeting, two whole-time members and two independent directors headed to the Reserve Bank of India (RBI) to inform the regulator of the developments. Given that HDFC is one of several systemically important banks, RBI acted swiftly; Mistry was appointed for three months.