HDFC Bank Chairman Steps Down Due to Ethical Differences, RBI Confirms No Governance Issues

Atanu Chakraborty has stepped down as part-time chairman and independent director ofHDFC Bank, citing “ethical” differences with certain practices at the lender.Following the resignation, theReserve Bank of India (RBI) statedthat the bank is a domestic systemically important bank (D-SIB) and has no major governance issues.“HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financials, professionally run board, and competent management team. Based on our periodical assessment, there are no material concerns on record as regards its conduct or governance,” the regulator said.What are systemically important banks in India?Systemically important banks, called Domestic Systemically Important Banks (D-SIBs) in India, are lenders whose failure could severely disrupt the financial system. Their large size, wide network, and deep links with other institutions make them critical to the economy. Because of this, they are often referred to as “too big to fail”.The RBI introduced the D-SIB framework in 2014. Banks are evaluated every year using systemic importance scores (SIS) and placed into different buckets. Depending on their bucket, they must maintain additional capital buffers in the form of Common Equity Tier-1 (CET1).Also ReadMinor bump or serious risk? Spotting the hidden signs of head injuryWest Asia crisis: Govt identifies 22 vessels for safe passage via HormuzNew Zealand to tighten immigration rules, expand checks on applicantsHDFC Bank share price crash: These mutual funds may see the biggest hitVolatility is back- so is value in equities: Axis MF lists quality themesThe central bank also publishes the list of D-SIBs annually. At present, State Bank of India, HDFC Bank, and ICICI Bank are classified as D-SIBs.For foreign banks classified as Global Systemically Important Banks (G-SIBs), additional capital requirements are applied in India in proportion to their local risk exposure.ALSO READ:No material concerns on HDFC Bank's governance and conduct, says RBIWhy are D-SIBs important for India’s banking system?D-SIBs play a central role in handling deposits and extending credit across sectors. Their stability is vital for maintaining confidence in the financial system.To reduce risks, these banks are subject to tighter regulation, higher capital requirements, and detailed recovery and resolution plans.If a bank of this scale were to fail, it could trigger a chain reaction across financial markets and institutions, affecting the broader economy. The framework, aligned with global standards, is designed to prevent such systemic shocks.How are banks classified in India across categories?Indian banks are grouped in several ways based on ownership, function, and regulation:Ownership-based classificationPublic sector banks (majority government-owned)Private sector banks (majority privately owned)Foreign banks (overseas lenders operating in India)Functional classificationCommercial banks offering full banking servicesSmall finance banks focusing on financial inclusionPayments banks providing limited services like deposits and remittancesRegulatory classificationScheduled and non-scheduled banks (based on RBI listing)Differentiated banks such as payments and small finance banksD-SIB status cuts across these categories and is based purely on systemic importance.What is the history and evolution of HDFC Bank?The origins of the group trace back to Housing Development Finance Corporation (HDFC Ltd), set up in 1977 as India’s first dedicated housing finance institution.In 1994, the RBI allowed private players to enter banking, and HDFC received approval to establish a bank. This led to the incorporation of HDFC Bank in August 1994, which began operations in January 1995.A major milestone came on April 4, 2022, when HDFC Ltd announced its merger with HDFC Bank. The deal combined the country’s largest housing finance company with its biggest private lender.Post-merger, HDFC Bank has evolved into a diversified financial services group offering banking, loans, insurance, and investment products through its subsidiaries.ALSO READ:Who is Atanu Chakraborty, ex-IAS who quit HDFC Bank over ethical issuesHow large is HDFC Bank’s footprint today?As of December 31, 2025, the bank operated 9,616 branches and 21,176 ATMs across 4,170 cities and towns. About half of its branches are located in semi-urban and rural areas.Its global presence includes branches in Hong Kong, Bahrain, Dubai, and an IFSC unit in GIFT City, along with representative offices in several international locations.