Chakraborty, an independent director since 2021, stepped down effective March 18, citing a mismatch between his ethical standards and certain internal happenings over the past two years. His letter to the board was candid: practices he witnessed did not sit well with his principles, though he stressed this was the sole reason for his departure.

Speaking exclusively to NDTV Profit, Chakraborty dismissed any notions of scandal. “There’s no irregularity or governance lapse here. It boils down to a difference in perspectives and values,” he said, reassuring stakeholders that his exit was ideological, not indicative of deeper problems.

The RBI swiftly greenlit Kekki Mistry’s appointment as interim chairman for a three-month stint from March 19, a move aimed at steadying the ship. Mistry commented that the transition poses no substantial hurdles for the bank.

HDFC Bank’s challenges extend beyond this episode. Post-merger with HDFC Ltd., the lender grapples with deposit mobilization, asset quality pressures, and regulatory scrutiny. Chakraborty’s tenure had been pivotal in navigating these waters, given his central banking background.

The stock’s plunge wiped out billions in market value, prompting questions about boardroom dynamics. While short-term volatility is expected, long-term investors may view this as a blip if the bank addresses underlying concerns transparently.

As Mumbai’s benchmark indices remained mixed, HDFC Bank’s underperformance highlighted sector-specific risks, with peers like ICICI and Kotak holding steadier.

Labeling HDFC Bank as a key domestic systemically important institution, RBI praised its strong financial metrics, adept leadership, and professional governance structures. This comes amid Chakraborty’s departure over cited ethical disagreements, prompting questions about internal dynamics.

RBI’s statement explicitly addresses the bank’s request for a smooth transition in the chairman’s role, granting full approval. Periodic reviews by the regulator found no red flags in governance practices or operational conduct.

The central bank detailed HDFC Bank’s well-capitalized status, healthy liquidity profile, and overall satisfactory financial standing. ‘We will maintain dialogue with the board and management on strategic directions moving forward,’ RBI added.

In a key development, former ICICI head Keki Mistry steps in as interim part-time chairman for three months from March 19, with RBI’s nod. Speaking to analysts, Mistry dismissed notions of crisis, stating his acceptance of the role reflects alignment with his core values.

“RBI’s prompt approval within days speaks volumes about their comfort level,” Mistry noted during the call. He urged stakeholders to view the change as routine rather than alarming.

Market reaction has been mixed, with shares dipping slightly, yet RBI’s vote of confidence could stabilize sentiment. This episode highlights the central bank’s pivotal role in fostering trust within India’s financial ecosystem, ensuring major players like HDFC Bank navigate transitions without broader disruptions.

Addressing analysts via conference call, the 71-year-old Mistry was candid: this responsibility resonates deeply with his lifelong principles. He recounted the whirlwind developments post-resignation, from board meetings to RBI consultations, culminating in the regulator’s quick endorsement—a clear sign of trust in the bank’s governance.

RBI’s official word on Thursday dispelled any doubts, stating no significant worries about operations or leadership. The central bank affirmed HDFC’s strong capitalization, professional board, and capable team, underscoring its D-SIB status.

The bank reiterated Chakraborty’s exit reasons matched his resignation letter, commending his two-year tenure since May 2021. No new board roles for him were noted.

Shares felt the jolt, plunging 8.40% intra-day to 770 rupees before closing 3.77% down at 811.50 on NSE. As HDFC navigates this interim phase, Mistry’s stewardship and RBI’s reassurance point to steady sailing ahead for this banking behemoth, even as markets remain volatile.