“I think in the US, law firms often issue press releases in an effort to identify potential plaintiffs after a decline in the values of the share price,” Chief Executive Sasidhar Jagdishan told shareholders at the bank’s annual general meeting in Mumbai.
Thus far, no lawsuit has been filed, said Jagdishan, adding that if a lawsuit is filed, the bank is well positioned to defend on facts and intent.
His clarification comes as several US law firms announced investigations into HDFC Bank on behalf of investors following media reports related to alleged governance issues. Such law-firm probes typically seek to identify shareholders who may wish to participate in potential class-action litigation.
“Following the resignation of the former part-time chairman, the board engaged with both domestic and international external law firms, overseen by a special committee comprising independent directors. The findings were disclosed to the stock exchanges on June 26,” said Rajiv Kumar, non-executive chairman, HDFC Bank.
Kumar replaced Chakraborty after the latter’s abrupt resignation. “The bank is fundamentally strong, with a pristine balance sheet. There are no governance-related concerns at the systemic level,” Kumar said, adding that the board is committed to ensuring that HDFC Bank operates from the pedestal of the highest levels of corporate governance.
He said the board would ensure that control functions remained fully empowered and reiterated a zero-tolerance approach toward unethical practices.Apart from governance, Kumar said HDFC Bank was at the cusp of a new phase of growth after completing the integration with HDFC Limited. He said the bank expected net interest margins and CASA ratio to improve over the next two to three years.
He also said more than 95% of new-to-bank home loan customers now open savings accounts with HDFC Bank, which shows that the merger with HDFC Limited has already begun unlocking meaningful synergies.