HDFC Bank Penalizing Staff; No Action Against Former Chairman

HDFC Bank is navigating a significant governance storm following the abrupt resignation of its part-time Chairman, Atanu Chakraborty, on March 18, 2026. 

While the bank has initiated a sweeping disciplinary crackdown, internal sources indicate that the lender is unlikely to file a legal suit or seek damages against Chakraborty, despite the market turmoil triggered by his exit.

The AT-1 Mis-selling Controversy

The crisis centers on the alleged mis-selling of Credit Suisse Additional Tier-1 (AT-1) bonds to Non-Resident Indian (NRI) clients through the bank’s Dubai and Bahrain branches. 

Staff reportedly marketed these high-risk instruments as safe, “fixed-deposit-like” products.

When the bonds were written off to zero during the UBS-led bailout of Credit Suisse, investors suffered massive losses, leading to a regulatory ban on HDFC Bank’s Dubai operations by the Dubai Financial Services Authority (DFSA).

Accountability Sweep: 12 Executives Penalized

In a move to restore investor confidence, HDFC Bank has penalized 12 executives for oversight lapses and conduct issues.

• Major Penalties: Four senior officials face severe disciplinary action, including the withholding of Employee Stock Ownership Plans (ESOPs) and the cancellation of annual increments. Among those named is Ashish Parthasarthy, Group Head of Branch Banking and Treasury.
• Minor Penalties: Eight other executives received minor penalties following a year-long internal investigation.
• Prior Terminations: This follows the mid-March dismissal of three top leaders: Sampath Kumar (Group Head, Branch Banking), Harsh Gupta (EVP, Middle East & Africa), and Payal Mandhyan (Senior VP).

HDFC Bank Chairman’s Exit and “Values Mismatch”

Atanu Chakraborty’s resignation letter cited a lack of congruence between the bank’s practices and his personal “values and ethics.” 

In subsequent interviews, he expressed concern that the bank viewed the Dubai lapses as “technical” rather than fundamental conduct issues. 

Despite the subsequent erosion of nearly $16 billion in market capitalization, the bank has appointed external law firms to review the board minutes rather than pursuing litigation against the former Chairman.

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