RBI Pushes HDFC Bank To Fast-Track Appointment Of Non-Executive Chairman

With just a day remaining for Keki Mistry’s tenure as interim chairman to end, the Reserve Bank of India (RBI) has advised HDFC Bank’s board to accelerate the process of appointing a non-executive part-time chairman, Moneycontrol reported.

According to the report, the regulator believes important strategic and governance decisions could be delayed in the absence of a permanent chairman.

Mistry’s role is currently interim, and there are concerns that his limited mandate may not be sufficient for taking key board-level decisions.

As a result, the RBI has emphasised the need for the bank to appoint a full-time non-executive chairman without further delay.

While an official communication from the RBI is still awaited, it is expected that Mistry may continue in the role until a successor is appointed.

The overall process of selecting a new chairman is likely to be completed by the end of June.

The RBI is also understood to be in regular contact with HDFC Bank’s board to monitor progress on the selection process. The nomination and remuneration committee (NRC) has reportedly forwarded a few names for consideration.

Discussions have also taken place with several former senior bankers and retired officials, although no final candidate has yet been selected.

As per regulatory norms, the chairman of a bank’s board must be a non-executive and independent director. In HDFC Bank’s case, there was some delay in formally initiating the selection process, which began only in late April. This was nearly a month after the departure of Atanu Chakraborty on March 17, 2018.

The RBI is believed to have taken a position that the interim chairman would not be granted an extended long-term tenure. At most, an extension of up to three months may be allowed, or until a new chairman is appointed.

Sources also noted that Mistry’s long association with the bank and its subsidiaries may affect his classification as an “independent” candidate for the permanent role. Hence, while he may continue temporarily, the regulator has made it clear that the appointment process must be completed swiftly.