And, he hardly spoke.
Wednesday’s abrupt resignation of Chakraborty may need come as a bolt from the blue for the financial markets. Yet, these observing the establishment from relative proximity had been seemingly making ready for the ostensible calm on the floor to be shattered by a volcanic eruption.
On a high-quality Wednesday afternoon round 2.30 pm when some high executives of the HDFC Group had been simply popping out of discussions with the regulator following a customary assembly, the financial institution’s board members obtained a notification for a gathering with out particulars of the agenda, stated an individual acquainted with the event. “None of us as board members are aware of what are the specific issues which Mr Chakrabarty wrote in his letter. The board members asked him yesterday and he did not give any specific explanation,” Keki Mistry, who has taken interim cost as chairman, stated through the analyst name on Thursday morning earlier than the markets opened for buying and selling.
Bank insiders stated Chakraborty’s involvement prolonged to strategic choices and senior administration promotions, additional irking the management staff.
“Chakraborty was increasingly seen as intervening in the day-to-day affairs and operations of the bank, which did not go down well with the senior leadership. The friction is understood to have intensified around the MUFG-HDB Financial Services discussions,” an individual acquainted with the matter stated.
Mitsubishi UFJ Group (MUFG) had sought to purchase a stake in HDB Financial, the HDFC Bank subsidiary, valuing the enterprise round $10 billion. The deal didn’t fructify, and the financial institution as a substitute sought to listing the non-bank lending arm to fulfill compliance necessities.
The Japanese monetary powerhouse then went on to purchase a large stake in Shriram Finance late final 12 months, the deal marking the largest international direct funding in Indian capital markets historical past.
Some of the board members sought to know the small print from Chakraborty on the ‘ethics and values’ he talked about in his resignation letter, however he declined to specify, stated one other particular person conscious of it.
“Over the past so many years he was part of many committees, but did not raise specific issues,” said another person.
Mistry added that in no board meeting, a total divergence of opinion was noticed with respect to the past chairman. And the board minutes would reflect that, he said.
Chakraborty did not respond to requests for an interview.
Over the years, Chief Executive Sashidhar Jagdishan and Chairman Chakraborty, have seen their engagement being minimal, unlike instances where the two positions interact well.
Over two decades, Sashi has been among key members who was a bridge between the management and the chairman and the process was smooth, said a person familiar. It is surprising that it broke down, he said.
“While not referring to any particular financial institution, there was a media report in December 2025 indicating {that a} financial institution’s chairperson was getting concerned in day-to-day affairs, which regulators had been uncomfortable with, because the position is supposed to be non-executive and targeted on oversight,” said Rohan Mandora, analyst Equirus Securities. “While the precise causes usually are not identified, doable areas of divergence may embody alignment between the board and administration on CEO succession, the financial institution’s post-merger technique, or different exterior developments.”
Just like molten rock remains uncomfortably mobile long before a volcanic eruption, the differences between the management and the chairman have been bubbling beneath the surface for years.
The most publicised dispute in the history of Indian finance has been the merger between HDFC and HDFC Bank. While it did not happen until the founding managing director of the bank, Aditya Puri, ended his tenure, the wheels were set in motion soon after he retired in October 2020.
Chakraborty as a member of the board was a key person in shepherding the merger at the bank, which it was resisting for years as the financial metrics could go adverse.
Beyond that, too, the management and the chairman were not on the same page on many issues leading to a relatively cold relationship.
“The chairman or the director can name for something, however among the issues had been too intrusive,” stated a banker who most popular anonymity. “It got here to such a scenario that the administration felt that it was getting crippled due to the interference.”
The trade could also be properly conscious of the rumblings contained in the financial institution, however even the regulator was knowledgeable in regards to the non-executive chairman taking choices. There was hypothesis that the regulator had, in its light-touch means, signalled that he mustn’t intrude with government decision-making on the lender.
That the RBI stepped in to place to relaxation any hypothesis that was triggered by Chakraborty’s expenses on ‘values and ethics’ on the financial institution signifies that the chairman was on one facet, and that the administration and the regulator had been on the opposite.
