Shares of India’s largest private lender HDFC Bank fell sharply on Thursday after the sudden resignation of its non-executive chairman Atanu Chakraborty, sparking concerns over corporate governance.

The stock dropped as much as 8.7% during early trading, marking its steepest decline in more than two years, before recovering slightly to trade about 4.3% lower. The fall also weighed heavily on the benchmark Nifty 50, which declined 2.3%.

Chakraborty cited differences over “values and ethics” in his resignation letter, raising questions about internal issues within the bank. However, HDFC Bank said there were no material operational concerns and suggested the exit may have stemmed from a personal rift with the management.

Following his departure, India’s central bank approved Keki Mistry as interim non-executive chairman for a three-month period. Mistry, a long-time executive within the HDFC Group, denied any governance issues or power struggles within the board.

“There could have been a relationship issue between Chakraborty and management,” Mistry said during a call with analysts, adding that the resignation was not linked to the bank’s performance or profitability.

Chakraborty, a former bureaucrat, had been serving as chairman since April 2021 and was reappointed in 2024 for a term extending to 2027. In his resignation statement, he noted that certain developments within the bank over the past two years were not aligned with his personal values, though he did not provide specific details.

Market analysts, including Kotak Institutional Equities, said the episode could raise concerns among investors about governance standards, despite the bank’s historically strong reputation.

The development has drawn significant attention in India’s financial sector, with investors closely watching for further clarity on the причины behind the leadership change.