HDFCBANK

MUMBAI, June 2 (Reuters) - India's Credila Financial Services HDFR.NS plans to raise up to 5.5 billion rupees ($57.75 million), including a greenshoe option of 3.5 billion rupees, through a sale of bonds maturing in five years, three bankers said on Tuesday.

It has invited coupon and commitment bids for the issue on Wednesday, they said.

The company did not immediately respond to a Reuters email seeking comment.

Here is the list of deals reported so far on June 2:

*Size includes base plus greenshoe for some issues

($1 = 95.2325 Indian rupees)

(Reporting by Dharamraj Dhutia and Khushi Malhotra; Editing by Sonia Cheema)

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Updates to add bank statement; latest stock price

MUMBAI, May 27 (Reuters) - Shares of India's top private lender HDFC Bank HDBK.NS fell as much as 2.5% 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 HDFC Bank spokesperson told Reuters the lender has robust internal oversight, audit and control processes and systems.

"All issues are dealt with in accordance with established norms, and full process is always followed before final determination post any internal review."

"We strongly reject any assumptions of wrongdoing or culpability based on selective material," the spokesperson said.

Shares of HDFC Bank were trading down 2.5% at 759.50 rupees by 1:20 p.m. IST in Mumbai while the benchmark BSE Sensex .BSESN was marginally lower.

The 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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** India's bank index .NSEBANK falls 1.1% while private .NIFPVTBNK, state-owned lenders .NIFTYPSU drop 1.3% each

** Drag broader markets 0.7% lower, with top-weighted HDFC Bank HDBK.NS down 2.2%

** Jefferies says Indian banks underperformed EM, regional peers YTD on Iran war concerns, HDFC leadership issues

** HDFC chairman's surprise exit hurt bank valuations, pressuring other lenders despite Reuters report on review finding no major governance issues - Jefferies

** Jefferies says clarity on HDFC leadership "crucial for re-rating" in banking sector

** Bank sector's price-to-book ratio of 1.5x near 20-year lows, barring COVID-19, 2008 crisis periods

** YTD, NSEBANK down 7.5%; HDBK leads losses, down 21.5%

(Reporting by Bharath Rajeswaran in Bengaluru)

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restores tag

By Gopika Gopakumar and Jayshree P Upadhyay

MUMBAI, May 6 (Reuters) - Law firms reviewing governance at HDFC Bank HDBK.NS are set to report this month that they have not found any major lapses, two people with direct knowledge of the findings said, clearing the way for the reappointment of its CEO.

India's largest private lender by assets called in Mumbai-based Trilegal and Wadia Ghandy & Co after Atanu Chakraborty resigned as chairman in March citing "incongruence" between his personal values and bank practices. He did not elaborate.

HDFC Bank shares extended gains on the day to as much as 3.1% at 796.95 rupees after the Reuters report, before easing a little to trade 2.9% higher at 0930 GMT. Shares were trading about 1.8% higher ahead of the Reuters report.

The resignation was followed by a 13.81% drop in the bank's share price, or $16 billion in the stock's value, and prompted a rare statement from the central bank seeking to allay investor and depositor concern about a lender deemed too big to fail.

It also threw into doubt the lender's application at the central bank due May-end to reappoint CEO Sashidhar Jagdishan.

The affair exposed leadership strain at HDFC, a bank majority-owned by foreign institutional investors and which has faced ire over stock that is down 5% since a $40 billion merger with parent HDFC Ltd in 2023. Closest rival ICICI Bank ICBK.NS has risen 33% in that time and the benchmark Nifty 50 is up 24%.

With 120 million customers and just over a tenth of banking deposits, a clean bill of health from the law firms would bring certainty to a bank whose stability is critical to the economy.

The law firms examined minutes and video recordings of board and extraordinary general meetings over the last three years to ascertain whether Chakraborty had raised governance issues and, if so, how those issues were addressed, the people said, declining to be identified as the findings are not public.

All issues raised at board level were handled as per prescribed processes, one of the people said, without elaborating on those issues.

The law firms are likely to hand their report this month to the board, which will then submit it to the central bank, the person said.

The review findings have not been previously reported.

Chakraborty declined to comment on Reuters' texted queries. HDFC Bank, the Reserve Bank of India, Trilegal and Wadia Ghandy & Co did not respond to emailed requests for comment.

BANK SET TO PROPOSE CEO REAPPOINTMENT

The resignation and review had delayed a board decision on whether to recommend Jagdishan for reappointment as CEO after his three-year term ends in October. The central bank approves lenders' CEO appointments.

HDFC Bank will propose Jagdishan for reappointment after the law firms submit their report, the second person said.

The central bank is of the view that there are no issues that could preclude reappointment, said a third person, who is familiar with RBI thinking. If the review tallies, the RBI would have no problem supporting reappointment, the person said.

After Chakraborty resigned, the central bank said that, on the basis of its periodical assessment, "there are no material concerns on record as regards its conduct or governance".

Proxy advisor InGovern Research Advisory Services last month said the resignation was likely driven by individual personality rather than any threat to shareholder value.

(Reporting by Gopika Gopakumar and Jayshree P Upadhyay in Mumbai; Editing by Ira Dugal and Christopher Cushing)

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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)

((For previous columns by the author, Reuters customers can click on BOSE/[email protected]))

Adds CEO comments

By Ashwin Manikandan

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

India's largest private lender is reporting its first quarterly results since its chairman resigned citing differences over "values and ethics". It is conducting a legal review of the incident and will provide a summary in due course, Chief Executive Sashidhar Jagdishan said on a post-earnings call.

HDFC Bank has hired two domestic law firms and one U.S.-based law firm to review the resignation letter from former part-time chairman Atanu ‌Chakraborty, Reuters reported last month, citing sources.

The bank 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 just above analysts' estimate 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 ended in March as easing inflation and lower taxes supported household spending and corporate borrowing.

HDFC Bank's advances rose 12% in the quarter from a year earlier, driven mainly by retail loans including mortgages and personal debt. Total deposits rose 14.4%.

Jagdishan did not provide a loan growth forecast for the 2026-27 financial year, citing geopolitical uncertainties.

"I'm being very conscious of staying away from getting a certain number to you all. But ... we are on the right track," he said.

The bank's management said earlier this year that loan growth would exceed the industry average.

Net interest income – the difference between interest earned on loans and interest paid on deposits - rose 3.2% to 330.8 billion rupees.

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

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% quarter on quarter to 19.25 billion rupees as rising bond yields and central bank curbs on foreign exchange options weighed on banks.

($1 = 92.5980 Indian rupees)

(Reporting by Ashwin Manikandan. Editing by Louise Heavens and Mark Potter)

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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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April 15 (Reuters) - Indian non-bank lender HDB Financial Services HDBF.NS posted a 41.4% rise in fourth-quarter profit on Wednesday, supported by healthy loan demand and a sequential improvement in asset quality.

Net profit rose to 7.51 billion rupees ($80.40 million) for the quarter ended March 31, from 5.31 billion rupees a year earlier.

($1 = 93.4080 Indian rupees)

(Reporting by Pranav Kashyap in Bengaluru; Editing by Ronojoy Mazumdar)

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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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March 30 (Reuters) -

• HDFC BANK FORMER CHAIR ON CNBC-TV18: MIS-SELLING OF AT-1 BONDS IN DUBAI TERMED AS TECHNICAL LAPSE BY CEO; BROUGHT REPUTATIONAL RISK TO BANK

• HDFC BANK FORMER CHAIR: PENALTY AGAINST OFFICIALS INVOLVED IN MIS-SELLING OF AT 1 BONDS IN DUBAI CAME AFTER MANY YEARS

• HDFC BANK FORMER CHAIR: MERGER WITH HDFC DIDN'T DISTORT THE BANK'S BALANCESHEET

• HDFC BANK FORMER CHAIR: INCENTIVE STRUCTURES, OVERSIGHT OF MANAGEMENT, BOARD SHOULD BE ALIGNED WITH INTEREST OF DEPOSITORS

• HDFC BANK FORMER CHAIR: PERSONALITY DIFFERENCES ARE OVERBLOWN, WASN'T DETERMINING FACTOR FOR RESIGNATION

• HDFC BANK FORMER CHAIR: CEO'S REAPPOINTMENT WASN'T DISCUSSED DURING MY TERM

Further company coverage: HDBK.NS

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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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Rewrites with names of law firms, adds no comment; paragraphs 1,3,6

By Chris Thomas, Gopika Gopakumar and Jayshree P Upadhyay

March 24 (Reuters) - India's HDFC Bank HDBK.NS has appointed two domestic law firms and one US-based law firm to review a resignation letter from former part-time chairman Atanu Chakraborty, sources with direct knowledge of the matter said on Tuesday.

Shares of India's largest private sector lender rose 1.3% after the news, snapping a three-day run of losses that chipped $16.27 billion in market value from the stock with the heaviest weighting in benchmark indexes.

The domestic firms Trilegal and Wadia Ghandy & Co have been asked to report on the governance standards followed at the bank, said the four sources, who spoke on condition of anonymity as they were not authorised to speak to the media.

The firms will study minutes of past board meetings to see if there is any truth in the differences over "values and ethics" cited in the letter from Chakraborty, who stepped down last week, said one of the sources.

The bank will not seek legal damages from Chakraborty for the reputational damage caused, the source added, however.

Trilegal, Wadia Ghandy and HDFC Bank made no immediate reponse to Reuters email requests for comments. Reuters could not identify the US-based firm.

BANK SEEKS "TO REINFORCE ROBUST GOVERNANCE STANDARDS"

HDFC Bank is hiring both domestic and international firms to examine the letter "to reinforce the robust governance standards of the bank", it told stock exchanges in a statement, without identifying the firms.

Earlier it said the abrupt exit, which slammed shares and prompted analysts to question if there were governance concerns, may have stemmed from a rift between Chakraborty and the management, but added there were no material issues at the bank.

For his part, Chakraborty gave no details. "Kindly read my letter," he said in reply to a Reuters text message. "It makes no claims or insinuations." He added, "Having resigned, I do not look into actions by the organisation."

Last week, the Reserve Bank of India said HDFC Bank was financially sound and professionally managed with "no material concerns on record" about its conduct or governance.

The RBI has approved former long-time HDFC Group executive Keki Mistry as interim non-executive chairman for three months.

Shares of HDFC Bank had fallen nearly 12% since Chakraborty's resignation.

Appointed part-time chairman in April 2021 and reappointed in May 2024 through May 4, 2027, Chakraborty oversaw HDFC Bank's $40-billion merger with mortgage lender HDFC Ltd, creating a financial services behemoth.

CONDUCT OF INDEPENDENT DIRECTORS

Tuhin Kanta Pandey, chief of the Securities and Exchange Board of India (SEBI), which regulates listed companies, declined to comment on individual matters when asked if it would seek additional details from Chakraborty.

Independent directors must follow the code of conduct set out in regulations, Pandey added, however. This includes raising any concerns with a company's board and insisting that the minutes of board meetings record any concerns not addressed.

"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."

Chakraborty's board position was that of an independent director and non-executive chairman.

Pandey added that the central bank, the Reserve Bank of India, which is the primary regulator of HDFC Bank, would probably look into various aspects of the matter.

(Reporting by Chris Thomas in Mexico City, Gopika Gopakumar and Jayshree P. Upadhyay in Mumbai; Additional reporting by Komal Salecha in Bengaluru; Editing by Sumana Nandy and Clarence Fernandez)

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