HDFC Bank's board commissioned an external legal review by two major law firms to investigate ethical concerns raised by former Chairman Atanu Chakraborty upon his resignation. After three months of document review, the firms concluded there was zero recorded evidence to support his claims.
Chakraborty has now publicly rejected the entire investigation, calling it "superfluous." His objection hinges on a procedural issue: he refused to participate because the bank repeatedly declined to provide him with the official terms of reference—the document that defines what investigators can and cannot examine.
In corporate governance, terms of reference are critical. They establish the scope and boundaries of an investigation, determining which areas fall under scrutiny and which remain off-limits. Without seeing these terms, Chakraborty argues he could not assess the investigation's fairness or participate meaningfully.
This public dispute between a former chairman and an incumbent board represents rare transparency into internal governance tensions at India's largest private bank. The back-and-forth raises a systemic question: when a bank hires external law firms to investigate itself, how independent can the findings be if the board controls what the investigators are permitted to examine?
The row highlights a structural tension in Indian corporate governance. External reviews are meant to lend credibility to internal investigations, yet their scope is set by the very institution being reviewed. This creates an inherent conflict of interest that questions whether such investigations serve as genuine audits or as tools to legitimize board decisions.
