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Legal advisers examining governance at Indian banking giant HDFC Bank are expected to tell the board this month that they have not identified any significant failings, reported Reuters citing undisclosed sources.
The conclusion would remove a key obstacle to the reappointment of chief executive Sashidhar Jagdishan.
The country’s biggest private-sector bank brought in law firms Trilegal and Wadia Ghandy & Co after former chairman Atanu Chakraborty stepped down in March, citing "incongruence" between his personal values and the bank’s practices. He gave no further details.
His departure triggered a 13.81% fall in HDFC Bank’s share price, wiping about $16bn from its market value.
The development also cast uncertainty over the bank’s filing with the central bank, due at the end of May, seeking another term for Jagdishan.
The episode highlighted strains at the top of HDFC Bank, which is majority-owned by foreign institutional investors.
According to the sources, the law firms reviewed board and extraordinary general meeting minutes, along with video recordings from the past three years, to determine whether Chakraborty had raised governance concerns and how those matters were handled.
Sources added that all matters brought before the board were dealt with under prescribed procedures but did not provide further detail.
The report is expected to be given to the board this month and then forwarded to the central bank, that person said.
The resignation and the subsequent review delayed a board decision on whether to back Jagdishan for another term when his current three-year tenure ends in October.
After receiving the legal review, HDFC Bank will put forward Jagdishan’s name for reappointment, the second person said.
If the legal review is in line with that view, the RBI would have no issue supporting his reappointment, the person said.
Following Chakraborty’s resignation, the RBI said that, based on its periodic assessment, "there are no material concerns on record as regards its conduct or governance".
In an interview with CNBC-TV18, Chakraborty discussed subjects such as the AT-1 bond issue, internal governance, and the market’s response to his departure.
"HDFC Bank governance review finds no major lapses – report " was originally created and published by Retail Banker International, a GlobalData owned brand.
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