New Delhi: HDFC, the country’s largest private bank, has suddenly come into the limelight. The reason is the resignation of the bank’s part-time chairman Atanu Chakraborty. In his resignation letter, he has raised questions on the functioning of the bank, which has created a stir in the stock market. HDFC Bank shares are at a 52-week low. Atanu Chakraborty has been an IAS officer of Gujarat cadre and became the part-time chairman of HDFC Bank in 2021 after retiring from the Finance Ministry. His second term was going on, which was to be completed next year. But he suddenly resigned. In his resignation letter he wrote that the working methods of the bank did not match his ethics and values.
HDFC story
HDFC was founded in 1977 by HT Parekh. The objective was to provide home loans to the people. Initially ICICI and other institutions also invested in it. After the economy opened up in 1991, private banks got a new path. HDFC Bank was established in 1994. With time HDFC Bank became bigger than its promoter company HDFC. Both merged in 2023. Now the bank is run by professionals and has no promoters.
action in bank
After the market closed on Friday, the bank removed three senior officials including the branch banking group head. It was alleged that AT1 bonds were sold to NRI customers in branches in Dubai and Bahrain on the assurance of FD-like security. Due to the bankruptcy of Credit Suisse, the value of these bonds became zero, causing losses to customers. The matter was under investigation for a year and now action has been taken.
RBI’s role
RBI has placed HDFC Bank in “Special Category”. That means the bank is so big that if something goes wrong in it, the entire economy can be affected. RBI said that the bank is safe, but the mood of the stock market is not good. Investors are not confident that everything is right inside the bank.
Bank figures show security
HDFC Bank is earning a profit of ₹ 60-70 thousand crores every year. Capital Adequacy Ratio is 20%, while RBI’s standard is 12%. This means, if a loan defaults, the bank has a buffer of ₹20 for every ₹100 of loan. This money is the bank’s own, not the customers’ money. However, shares are cheaper than the average of the last five years. The profit ratio was earlier 25-27 times, now it is 17-18 times. Investors are waiting for answers to the questions raised by the chairman’s resignation.
