HDFCBANK

MUMBAI, May 27 (Reuters) - Shares of India's top private lender HDFC Bank HDBK.NS fell as much as 2% on Wednesday after local media reported that the lender made illegal payments to a state government department to attract deposits.

The Indian Express newspaper reported, citing sources and documents, that HDFC Bank paid 450 million rupees ($4.7 million) to the road development corporation of the western state of Maharashtra to draw large deposits. Regulations do not allow lenders to pay varied interest rates to depositors.

HDFC Bank disguised the additional payments as marketing spends to incentivise the department to make the deposits, the report said, adding that CEO Sashidhar Jagdishan was aware of these payments.

Reuters could not independently verify the report. An email sent to HDFC Bank did not receive an immediate response.

Shares of the lender were trading down 1.9% at 764.20 rupees by 10:40 a.m. IST in Mumbai while the benchmark BSE Sensex .BSESN was marginally higher.

HDFC Bank's shares have fallen 9.5% since March 19, when Atanu Chakraborty abruptly resigned as the lender's part-time chairman, raising questions about governance practices.

While Chakraborty had not made specific allegations, he had said that practices at the bank were not in line with his "personal" values and ethics.

Legal firms appointed by HDFC Bank to review the claims have yet to find material lapses in processes followed by the bank, Reuters reported earlier this month.

The outcome of the legal review is awaited.

HDFC Bank has also yet to submit an application for the central bank to reappoint CEO Jagdishan, whose three-year term ends in October.

($1 = 95.7600 Indian rupees)

(Reporting by Ira Dugal; additional reporting by Vivek Kumar M in Mumbai; Editing by Mrigank Dhaniwala)

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MUMBAI, May 14 (Reuters) - India's HDB Financial Services HDBF.NS plans to raise up to 16.75 billion rupees ($175 million), including a greenshoe option of 13.75 billion rupees, through the sale of bonds maturing in three years, three bankers said on Thursday.

It will pay a floating-rate coupon, with an initial rate at 7.3517%, and subsequent rates will be based on a three-month t-bill rate with a spread of 205 basis points, they said, adding the company has invited commitment bids on Friday.

HDB Financial did not immediately respond to a Reuters email seeking comment.

Here is the list of deals reported so far on May 14:

*Size includes base plus greenshoe for some issues

($1 = 95.7300 Indian rupees)

(Reporting by Dharamraj Dhutia and Khushi Malhotra; Editing by Eileen Soreng)

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** HDFC Bank HDBK.NS shares rise nearly 3% to 796.95

** Law firms reviewing governance at the bank set to report that they have not found any major lapses, Reuters reported

** Shares were up about 2% before the report

** Clearance will pave way for reappointment of CEO Sashidhar Jagdishan

** Review after Atanu Chakraborty resigned as chairman, citing "incongruence" between personal values and bank practices

** None of the involved parties respond to request for comment, including HDFC and Chakraborty

** Thirty-eight analysts have a "strong buy" rating on avg; median PT is 1,050 rupees - data compiled by LSEG

** YTD, HDBK down about 20%

(Reporting by Urvi Dugar in Bengaluru)

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By Dharamraj Dhutia

MUMBAI, May 5 (Reuters) - Currency in circulation in India surged by over 610 billion rupees ($6.40 billion) in the first 15 days of April, pushing the total to a record 42.3 trillion rupees, and a sustained pattern could impact liquidity, economists said.

The spike, up 11.8% on-year and the highest since early 2017 after demonetisation, extends a rise in cash demand seen over the past six months and through the last financial year, central bank data showed.

Currency demand had been "somewhat subdued" relative to GDP growth in recent years, setting the stage for a sharper rebound, helped by strong rural demand, said Abhishek Upadhyay, co-head of research at ICICI Securities Primary Dealership.

A cut in the goods and services tax on several daily-use items in September also boosted demand.

Lower interest rates have further supported cash usage, particularly in rural areas with a higher propensity to spend, said Soumya Kanti Ghosh, group chief economic adviser at State Bank of India.

He added that higher prices of precious metals may have also lifted currency in circulation through recycling of gold and silver from households.

The surge, if it persists, could pose a challenge for surplus liquidity in the banking system, which the central bank has tried to maintain to support economic activity.

HDFC Bank expects the liquidity surplus to average around 1% of deposits in the first half of the current financial year, before easing to 0.5% in second half.

"But if CIC continues to remain elevated due to rise in inflation, further acceleration in rural demand, and any impact from state elections, liquidity balances could move towards the lower band of the forecast range," economist Sakshi Gupta said.

The RBI said in March that holding the surplus within a range of 0.6%-1.1% of deposits helps in keeping the spread between weighted average call rate and policy rate narrow.

RBI's infusions have kept banking liquidity in surplus but going forward, while RBI dividend will support it, CIC will drain it further, said Dhiraj Nim, an economist and FX strategist at ANZ.

($1 = 95.2725 Indian rupees)

(Reporting by Dharamraj Dhutia; Editing by Nivedita Bhattacharjee)

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Mumbai, May 2 (Reuters) - India's Kotak Mahindra Bank KTKM.NS reported a jump in fourth-quarter profit that beat estimates on Saturday, supported by strong loan growth and lower provisions for potential bad loans.

The country's third-largest private lender's standalone net profit rose 13% to 40.27 billion rupees for the quarter ended March 31 from last year. Analysts had expected a profit of 37.37 billion rupees, according to data compiled by LSEG.

Loan demand in India gained momentum in the second half of the fiscal year ended in March ​as easing inflation and lower taxes supported household spending and corporate borrowing.

The lender's net advances expanded 16% in the quarter from a year earlier, mainly driven by retail and corporate loans. Total deposits rose by 15%.

Last month, larger peers HDFC Bank HDBK.NS and ICICI Bank ICBK.NS beat profit views aided by strong loan growth.

Net interest income – the difference between interest earned on loans and interest paid on deposits - rose 8% ​to 78.76 billion rupees.

Provisions and contingencies fell 36% quarter-on-quarter and 43% year-on-year to 5.16 billion rupees.

The lender's gross non-performing asset ratio fell to 1.2% at the end of March, from 1.42% in the year-ago quarter.

(Reporting by Ashwin Manikandan, Jayshree P Upadhyay in Mumbai and Nishit Navin in Bangalore; Editing by Harikrishnan Nair and Peter Graff)

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The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Shritama Bose

MUMBAI, April 30 (Reuters Breakingviews) - The jobs crisis stirring in India’s vast outsourcing industry spells trouble for the country’s $4 trillion consumption-led economy. With the gap between household income and spending already widening, the consequences of the churn on finance and markets will be far-reaching.

White collar jobs are starting to disappear in the world’s services capital where many global firms employ thousands of staff in global capability centres that are responsible for everything from back-office functions to fraud detection to critical research and development.

Following the launch of artificial intelligence tools by Anthropic and others that allow companies do the same amount of work with fewer people, Oracle ORCL.N laid off 10,000 workers, or one-fifth of its India workforce in March, and Amazon.com AMZN.O let go of 500 people in the country in January, the Economic Times reported, citing sources. It looks like just the beginning of the headcount reductions.

One executive of a global bank told Reuters Breakingviews their workforce in India could shrink by one-third. This could happen quickly within just one or two years because of the double digit attrition rates at offices of global firms in cities including Bengaluru, Gurugram and Pune. JPMorgan Chase JPM.N has a whopping 55,000 employees in the country, which equals about one-fifth of its total workforce and includes one-third of all its technologists; HSBC’s HSBA.L 47,000 local employees make up 23% of its global headcount.

Then there is also “AI deflation” – the term Indian IT firms that typically lap up fresh graduates use to refer to slowing revenue growth. Annual revenue in U.S. dollar terms at industry leader Tata Consultancy Services TCS.NS shrunk for the year ended March 2026, marking the first decline since the $97 billion company's initial public offering ​in 2004.

Altogether, global capability centres and the IT sector employ up to 15 million people who anchor India’s middle class and whose jobs are under threat from generative AI, Bernstein analysts Venugopal Garre and Nikhil Arela said last week in an open letter to Prime Minister Narendra Modi.

Though this is a small fraction of India’s 616-million-strong workforce comprised mostly of swathes of informal and agricultural workers, the AI vulnerable cohort represents a sizeable chunk of the employed within the rising middle class. With fewer jobs, there will also be pressure on salaries for those who keep theirs.

For India, advances in generative AI are intensifying the intractable challenge of creating enough jobs in a country that skipped over the traditional manufacturing route and where 8 million people enter the workforce each year. Modi's push to drive manufacturing isn’t softening the blow much either, thanks to factory automation.

There are already signs that India’s world-beating 7.8% growth is decoupling from employment generation: New Delhi’s latest Economic Survey notes that since 2022 – the same year that OpenAI launched ChatGPT -- the labour intensity of output has marginally declined. That rupture will deepen unless workers upskill, the survey says, with the change coming “not in a single shock, but in a quiet, steady drift”.

This threatens a blow to spending on what people want, rather than what they need. Private consumption accounts for about 60% of GDP and the top 140 million Indians who on average each earn roughly $15,000 per annum, according to Blume Ventures, drive two-thirds of discretionary spending.

Any contraction in their incomes could force them to cut back, hitting sales of goods from new homes to cars and demand for experiences from dining out to live events. There will be a ripple effect too: Middle-class homes in India employ cooks, cleaners and drivers.

Demand for their services, and those of India’s vast gig economy servicing the middle class, would recede. That puts at risk earnings of carmakers, consumer groups and financial services providers which, together with Mukesh Ambani's Reliance Industries RELI.NS – the owner of India’s largest retailer - account for nearly 62% of the benchmark Nifty 50 index .NSEI. Sluggish consumption is already hurting some of them: small car sales slowed at Maruti Suzuki India MRTI.NS last year and Unilever's ULVR.L Indian unit has been grappling with weak urban demand.

A potential 30% reduction in the 15-million-strong outsourcing and global capability centre workforce over the next two years could shrink the top consuming class by about 5 million to 135 million.

Assuming Blume Ventures' annual income estimate of $15,000, this cohort's total spending power stands to fall by roughly $75 billion a year, assuming those people don't find other employment or sources of income. That's equivalent to 10% of the Nifty 50 constituents’ net sales of 71.3 trillion rupees ($755 billion) for the financial year ended March 2025, per data from the National Stock Exchange.

Overall household savings are already declining as indebtedness mounts: Indians saved barely 23% of their personal disposable income in the financial year to March 2025, according to an estimate by CLSA, down from nearly 30% two decades earlier. Debt as a share of disposable income surged to 55% from 31% over the same period.

While India’s household debt to GDP ratio is much lower than for most peer economies, meagre earnings mean Indians end up spending 13% of their income on repaying borrowings, higher than 8.5% for China and 8% for the US.

Much of what Indians borrow goes towards financing consumption rather than creating assets. Households are leveraging up to pay for everything from overseas vacations to weddings and smartphone purchases.

Such financing, which the Reserve Bank of India calls non-housing retail loans, makes up 55% of household obligations and is growing faster than mortgages. India's household debt to GDP ratio stands at 41.9%. If half of those borrowings are consumption-linked, it implies household discretionary debt amounts to roughly 21% of GDP. Apply that to India’s nominal GDP of 331 trillion rupees for 2024-25 and you have at risk loans worth 69 trillion rupees across the country’s banks and non-bank lenders.

This threatens the loan quality at financial institutions led by the $130 billion HDFC Bank HDBK.NS as well as lenders backed by global investors from Sumitomo Mitsui Financial 8316.T to Blackstone BX.N who are accelerating their expansion in India to tap retail credit demand.

The impact of AI on the global workforce may ultimately create more jobs. First, though, it may turn India’s already weak consumption and much-vaunted demographic dividend into a nightmare.

Follow Shritama Bose on LinkedIn and X.

(Editing by Una Galani; Production by Aditya Srivastav)

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MUMBAI, April 18 (Reuters) - India's HDFC Bank HDBK.NS reported a stronger-than-expected increase in fourth-quarter profit on Saturday, on a pick-up in lending to consumers but lending margins remained weak.

The bank, which is reporting its first set of quarterly earnings since its chairman resigned citing differences over "values and ethics", did not comment on the ongoing independent legal evaluation of the concerns raised in its press release.

The country's largest private lender posted a standalone net profit of 192.2 billion Indian rupees ($2.08 billion) for the quarter ended March 31, compared with 176.16 billion rupees a year earlier and marginally above analysts' estimates of 191.16 billion rupees, according to data compiled by LSEG.

Loan demand in India gained momentum in the second half of the fiscal year that ended in March as easing inflation and lower taxes supported household spending and corporate borrowing.

HDFC Bank's advances rose 12% from a year earlier at the end of the quarter, driven primarily by retail loans that include mortgages and personal debt. Total deposits rose 14.4%.

The lender's net interest income – the gap between interest earned on loans and interest paid on deposits, a key measure of profitability – rose 3.2% to 330.8 billion rupees.

The net interest margin was stable at 3.38% but remained below the 4% level seen before the bank merged with its parent HDFC Ltd in 2023.

Analysts have watched for an improvement in margins as an indicator of success of the $40 billion merger.

Gross non-performing loans as a share of total loans eased to 1.15% at end-March from 1.24% in the previous quarter.

Income from treasury operations fell 13.6% on-quarter to 19.25 billion rupees as rising bond yields and the Indian central bank's curbs on forex options hurt banks.

($1 = 92.5980 Indian rupees)

(Reporting by Ashwin Manikandan; Editing by Mrigank Dhaniwala and Louise Heavens)

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** Analysts on average expect HDFC Bank's Q4 profit to rise 8.5%, while ICICI Bank to post a flat profit growth on Saturday, according to data compiled by LSEG

** Healthy loan growth to drive topline increase for the top two Indian private lenders; HDFC Bank posted 12% rise in loans as of March-end

** While ICICI Bank did not give a quarterly update, analysts expect its loan growth at 14%

** They expect provisions to be elevated on y/y basis for ICICI Bank after a rise in Q3 following banking regulator's supervisory review

** Net interest margin expected to remain stable for HDBK, while it may shrink slightly for ICBK, as rate cut impact will be offset by deposit repricing, RBI's slashing of cash reserve ratio

** Asset quality to be broadly stable for ICBK, and HDBK's credit costs to be under control due to absence of seasonal stress - Motilal Oswal

** YTD, HDBK down 19%, while ICBK is flat compared to a 7% drop in Nifty 50 .NSEI

(Reporting by Nishit Navin in Bengaluru)

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Correct typographical error in headline

April 16 (Reuters) - HDB Financial Services HDBF.NS rallied as much as 11% on Thursday after the Indian non-bank lender reported a sharp 41.4% increase in quarterly profit on margin expansion and healthier asset quality

The stock touched its highest level in nearly two months, and was last up 9% at 702.25 rupees, putting it on track for its best session on record.

(Reporting by Pranav Kashyap in Bengaluru)

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By Bharath Rajeswaran and Nishit Navin

BENGALURU, April 15 (Reuters) - Indian banks are expected to report a steady profit rise in the January-March quarter, four brokers said, aided by credit growth and liquidity buffers, while higher bond yields and forex arbitrage curbs weighed on treasury income.

Private banks are likely to report about 8%-12% on-year profit rise, with HDFC Bank HDBK.NS and ICICI Bank ICBK.NS scheduled to post their results on April 18.

State-run lenders may report an advance of about 2%, similar to the previous two quarters, aggregate estimates from Motilal Oswal, Jefferies, PhillipCapital, Elara Capital and Yes Securities showed.

Private banks' higher core operating income should cushion margin pressure, while bond yields are expected to weigh more heavily on state-run banks' treasury gains.

After a slow start to the fiscal year 2026, loan demand picked up in the third quarter.

The government's move to cut goods and services tax encouraged people to spend more, while the Reserve Bank of India's slashing of the cash reserve ratio gave banks more money to lend.

Top private lender HDFC Bank posted a loan growth of 12% in the March quarter, while ICICI Bank and state-owned State Bank of India SBI.NS could log 14.2% and 14.5%.

"We estimate banks to post around 12% to 13% loan growth in FY2027, aided by steady growth in retail and MSME loans and improvement in corporate loans," said Vishal Narnolia, assistant vice-president, research, ICICI Securities.

However, in contrast to the first nine months of FY2026, yields hardened in the March quarter, which will limit banks' profitability, said Narnolia.

Curbs on forex arbitrage further limited trading income at bigger lenders such as SBI, ICICI, HDFC and Axis Bank AXBK.NS.

Quarterly updates from top lenders indicate a high-single-digit to low-double-digit jump in deposits, similar to the previous on-year quarter.

Strong year-end inflows and healthy traction in retail deposits are likely to aid deposits, according to brokerages.

The bank index .NSEBANK fell 15.6% in the March quarter, slightly more than the 14.5% drop in the benchmark Nifty 50 index .NSEI.

​

(Reporting by Nishit Navin and Bharath Rajeswaran; Editing by Harikrishnan Nair)

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By Gopika Gopakumar

MUMBAI, April 8 (Reuters) - The Reserve Bank of India plans to revise guidelines for bank boards to encourage greater focus on policy matters rather than day-to-day operations, Governor Sanjay Malhotra said in a monetary policy speech on Wednesday.

The move follows recent tensions at HDFC Bank HDBK.NS, the country's largest lender, where the chairman resigned abruptly, citing differences over "values and ethics."

Reuters has previously reported, citing sources, that the chairman's involvement in operational and management matters had led to internal friction with CEO Sashidhar Jagdishan.

"A comprehensive review of instructions is being undertaken following the request of banks, which will facilitate better utilisation of bank boards' time," Malhotra said.

"We propose to revise and rationalise matters that require the attention of the board. This will result in boards being able to divert more time to policy matters, leaving operational matters to the management."

(Reporting by Gopika Gopakumar; Editing by Sumana Nandy)

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Updates throughout

April 2 (Reuters) - India's bank stocks dropped to their lowest levels in nearly a year on concerns over potential losses after the central bank intensified its crackdown on speculative activity in the rupee.

The Nifty Bank index .NSEBANK slid as much as 2.8% to 50,004.30 points - its lowest level since April 9, 2025 - with all constituents trading lower.

The index has fallen 4.3% this week following the Reserve Bank of India's curbs, underperforming the benchmark Nifty 50 .NSEI, which is down 2.6%.

On Wednesday, the RBI barred banks from offering rupee non-deliverable forwards to resident and non-resident clients, days after it put a limit of $100 million on banks' net open rupee positions.

Jefferies said banks were hoping to mitigate losses stemming from the initial measures by transferring or selling part of their positions to corporates, hedge funds and other clients.

The fresh curbs may bring the losses back to original estimates or a tad higher at 40 billion rupees to 50 billion rupees ($428.05 million-$535.07 million), the brokerage said.

The RBI's measures come as the rupee INR=IN has hit a string of all-time lows on worries over spillovers from the Iran war. The currency fell 4.24% in March, its worst monthly drop in six years, before the latest curbs helped it rise 1.4% to 93.53 per U.S. dollar in early trade on Thursday.

Private lenders HDFC Bank HDBK.NS and ICICI Bank ICBK.NS dropped 1.4% each on Thursday, while state-run banks logged sharper losses. State Bank of India SBI.NS was down 2.9%, while Punjab National Bank PNBK.NS, Canara Bank CNBK.NS and Union Bank of India UNBK.NS lost 3.4%, 3.6% and 3.9%, respectively.

Jefferies expects banks to book part of their losses in the January-March and April-June quarters, and said foreign lenders account for 45% of the currency derivatives market and related losses, while private banks have a 40% share.

($1 = 93.4460 Indian rupees)

(Reporting by Vivek Kumar M in Bengaluru and Ashwin Manikandan in Mumbai; Editing by Sonia Cheema)

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** India's HDFC Bank HDBK.NS down 2.7% this week to 759.25 rupees

** Set for fifth straight week of losses, marking the longest losing streak in six years

** Stock down 2.9% on Friday; India's markets regulator reviewing former chairman Atanu Chakraborty's exit letter, per Reuters report

** Chakraborty resigned last week, citing ethical differences with the lender; stock is down ~10% since then

** Stock rated "Buy" on average from 38 brokerage firms; median PT at 1,150 rupees, per data compiled by LSEG

** YTD, HDBK down 23.4% vs Nifty Bank's .NSEBANK 12% drop

(Reporting by Vivek Kumar M)

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By Jayshree P Upadhyay

MUMBAI, March 26 (Reuters) - India's markets regulator has begun a preliminary review of the resignation letter of former HDFC Bank HDBK.NS chairman Atanu Chakraborty for possible violations of rules governing directors of listed companies, two sources familiar with the matter said.

Chakraborty told Reuters he was not aware of any examination by the regulator.

In his resignation letter, Chakraborty cited "certain happenings and practices within the bank" that he said were "not in congruence" with his personal values and ethics.

He did not elaborate. The letter triggered an 8.7% slide in the stock the following day and wiped $16.3 billion in market value over three sessions.

REGULATOR MAKING CHECKS

A department of the Securities and Exchange Board of India (SEBI) that oversees corporate disclosures and governance is examining the former chairman and other directors for alleged failures to do their fiduciary duties, the sources said.

"(The) examination is to verify claims made in the resignation letter and whether other directors were aware of any material information and did not document them," one said.

The Reserve Bank of India, the primary regulator in the case, said last week it had found "no material ​concerns on record as regards its (bank's) conduct or governance".

"We are also checking if there was any misreporting of any events which could impact minority investors," the first source said, adding that SEBI was reviewing the adequacy of disclosures by both the bank and Chakraborty.

India's rules for listed companies require independent directors to assess the quality and timeliness of information flow between management and the board.

Email queries sent to HDFC Bank and SEBI were not immediately answered.

Chakraborty told Reuters by text that he had not made any insinuations in his letter. He added that no one from the regulator had contacted him and that he was unaware of any SEBI review.

Earlier this week, SEBI Chairman Tuhin Kanta Pandey, without commenting on individual cases, said independent directors must follow the code of conduct set ​out in regulations.

"No one can make insinuations without proper evidence being recorded," Pandey said. "Any such comments do have an impact on minority shareholders .... Independent directors have to be responsible in ⁠terms of ​what they say."

HDFC Bank said on Tuesday it had appointed external law firms to independently assess the concerns raised in the resignation letter. Chakraborty told Reuters the firms had not contacted him.

(Reporting by Jayshree P Upadhyay. Editing by Mark Potter)

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** HDFC Bank HDBK.NS shares down 2.4% to 762 rupees, set for third session of losses after non-executive chairman resigned last week; Nifty 50 .NSEI down 1.73%

** Stock, heaviest weighted on benchmark, fell 7.4% over last two sessions; .NSEI fell nearly 3%

** HSBC ("buy", cuts PT to 990 rupees from 1,070 rupees) says confident that there is no governance concern but former chairman's "strong statement" likely overhang

** Co needs to appoint replacement soon - HSBC

** ICICI Securities ("buy", PT at 1,120 rupees) says abrupt resignation stirs uncertainty

** Adds, bank’s explanation, track record and RBI statement assuring

** Both brokerages stress need for strong performance metrics to restore confidence

** HDBK rated "buy" on avg by 38 analysts covering it; median PT at 1,150 rupees- data compiled by LSEG

** YTD, HDBK down 21%, .NSEI down 11.5%

(Reporting by Komal Salecha in Bengaluru)

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The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Refiles to add editing credit.

By Shritama Bose

MUMBAI, March 20 (Reuters Breakingviews) - India's largest private-sector bank faces a fresh test set by the outgoing head of its board. Career bureaucrat Atanu Chakraborty on Wednesday resigned as HDFC Bank's HDBK.NS non-executive chair, stating in a cryptic letter that "certain happenings and practices" at the group were "not in congruence" with his personal values and ethics. The Reserve Bank of India’s swift intervention stemmed a stock rout, but the saga leaves both the regulator and the $130 billion lender’s management in a tight corner.

HDFC Bank's shares initially tanked 9% on Thursday, before recovering to end 5% lower after the RBI said it had no material concerns about governance. Chakraborty dialled down his tone too, telling a news channel later that his departure was "quite routine" and "nothing worth discussion". That makes the mess at the systemically important bank look like a case of botched communication.

The damage goes further, though. Chakraborty took up the position in 2021 and oversaw a merger between HDFC Bank and its mortgage-lender parent Housing Development Finance Corporation. The public-policy veteran made an uneasy pairing with the group's CEO and career banker Sashidhar Jagdishan. Now, group insider Keki Mistry will lead the board on an interim basis. He said on Thursday that there "could have been a relationship issue" between Chakraborty and management.

The outgoing chair is right that HDFC Bank has struggled to harvest the financial fruits of the recent megadeal. Its core net interest margin at the end of 2025 stood at 3.35%, compared with 4.1% in June 2023, just before the merger took effect. That's partly because low-cost deposits, defined as those costing the bank less than 2.5%, have shrunk to 34% of the total from 42.5% over that period. HDFC Bank's market capitalisation is now lower than it was shortly after the merger, and its shares trade at roughly 2 times forward book value, which is half its 2018 multiple and lower than rival ICICI Bank's ICBK.NS current rating.

The saga could also blow back on the central bank, whose memo risks aging badly if any new snafus emerge. HDFC has earlier faced a regulatory ban on new credit-card business as a penalty for a shaky digital platform. Research analysts at Macquarie removed HDFC Bank from a "buy list" of equities, stating that "governance concerns will ⁠weigh" on the stock. On a Thursday investor call, a participant from BlackRock struck a highly sceptical note, stating "whatever I heard on this call doesn't make me any wiser than I was an hour ago".

The mess puts a new light on several senior management exits at the bank since the merger, including at its corporate banking and mortgages divisions. It also complicates the task for interim chair Mistry and his CEO Jagdishan, whose six-year term comes up for renewal in October. As the board, and its regulator, mull that decision, the stakes are suddenly higher.

Follow Shritama Bose on LinkedIn and X.

CONTEXT NEWS

HDFC Bank non-executive chair Atanu Chakraborty stepped down from his role late in the evening on March 18, citing ethical reservations over "certain happenings and practices within the bank", according to a filing by the Indian lender containing his resignation letter. The bank appointed board member Keki Mistry as interim chair for a period of three months.

His departure triggered an up to 9% slide in HDFC Bank's stock on March 19 and prompted an intervention by the Reserve Bank of India. The regulator said in a statement that it had "no material concerns" over the lender's "conduct or governance", adding the bank is well-capitalised, and has a satisfactory financial position and sufficient liquidity.

Chakraborty told news channel ANI on March 19 his resignation was "nothing worth discussion" and "quite routine".

On March 19, HDFC Bank's shares closed 5% down and on March 20 the stock fell a further 2% in early trading, underperforming the Nifty 50 Index.

(Editing by Liam Proud and Una Galani; Production by Streisand Neto)

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