By Anto Antony
An internal probe by HDFC Bank Ltd. — India’s largest by market value — found evidence that two senior executives disclosed confidential business strategies and possible market-sensitive information to outsiders, according to people familiar with the matter.
The executives oversee certain key businesses and functions at the bank, according to the people, who asked not to be named discussing confidential matters.
HDFC identified the executives during an internal investigation that began after some leaders grew concerned about the possibility of information being leaked, the people said. The probe is still underway as the bank continues to examine whether the information was misused, the people said.
An HDFC Bank spokesperson acknowledged an internal review, but didn’t comment on its findings or the executives involved. “In line with our policies, an internal review into this matter is currently underway to gather and evaluate all relevant facts,” the spokesperson said by email. “Appropriate action will be taken based on the findings, once the review is complete.”
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The bank said it was committed to upholding the highest standards of ethics and governance and takes reports of potential violations seriously.
The review comes at a sensitive moment for HDFC Bank, which has a market value of about $115 billion and has spent three decades cultivating a reputation for conservative management, strong internal controls and consistent profitability. The lender is preparing for its first outsider chief executive following boardroom disputes and management departures. Its share price has declined about 28% this year.
The probe and its findings were reported to senior management, including some members of the board, earlier this year, the people said. Both executives have since been formally informed of the findings, and it wasn’t immediately clear what disciplinary action will be taken, the people said.
The findings add to the challenges confronting Anup Bagchi, a veteran of rival ICICI Group, who is set to become HDFC Bank’s chief executive on Oct. 27.
In recent months, internal divisions in HDFC have played out publicly. In March, then-chairman Atanu Chakraborty resigned abruptly, citing differences between his personal values and certain practices at the bank. An independent legal review commissioned by the lender subsequently said his concerns were not substantiated.
Bagchi’s appointment follows the surprise decision of Sashidhar Jagdishan, the incumbent chief executive, not to seek another term. Jagdishan is stepping down after six years at the helm.
Kaizad Bharucha, deputy managing director and one of the bank’s longest-serving executives, has also asked to leave at the end of December.
Founded in 1994, as the country opened its financial sector to private competition, HDFC Bank grew into a preferred investment for international fund managers seeking exposure to India’s rising incomes and expanding consumer credit.