Atanu Chakraborty, former part-time chairman of HDFC Bank, said there were several issues which triggered his resignation, including the misselling of AT-1 bonds in Dubai and the under-performance of the lender on multiple counts.

Chakraborty, a former Indian Administrative Service officer, said the "under-performance" areas included the bank’s share price, subdued credit growth, lower share of the cheaper CASA (current account saving account) deposits and a high cost-to-income ratio.

Chakraborty clarified that personal differences with the management “are overblown” and not the issue “by a long distance” for his resignation earlier this month. He reiterated that “incongruence” on values and ethics led him to quit the board.

Chakraborty said in an interview with CNBC TV-18 that HDFC Bank’s chief executive had viewed the misselling of the AT-1 bonds as a "technical issue" involving documentation and regulatory interpretation. Action in the matter came eight years later, much after the regulator in Dubai and also India had raised the issue.

"I feel that these conduct issues should not arise... tight supervision should ensure that even if they arise, they're nipped in the bud. However, if they are termed as technical, it leaves a little bit of a leeway," he said.

The reputation can be damaged due to such conducts, Chakraborty said, adding that people come to bank for advice and that compensation practices have to be in sync with value systems to ensure that misselling does not happen.

"The incentive structures, the oversight of the management and the board should ensure that they are aligned with the interests of depositors, shareholders and public at large," he said.

In September last year, authorities in Dubai barred HDFC Bank from adding new customers at its branch in the Dubai International Financial Services Centre as a penalty for the alleged misselling of Credit Suisse's additional tier-1 bonds, which were written off in 2023.

On capital markets regulator Sebi’s advise to independent directors to act responsibly and not insinuate anything, Chakraborty said he mentions "incongruence" over values and ethics in the letter. People should take a dictionary's help to understand if that is akin to insinuation, he said.

Chakraborty denied that his abrupt resignation led to a sharp correction in the bank’s share price. He said that the Iran war and an unfavourable move by the US Fed had roiled the markets.

On whether a potential deal with Japan’s MUFG did not have his backing and was among the reasons for the bank management’s differences with him, Chakraborty said the decision to list HDB Financial Services was driven by a RBI mandate to go for an IPO within a timeframe.