What Exactly is Happening With HDFC Bank? | Explained
Executive Summary
A Think School explainer on the turmoil at HDFC Bank, India's second largest lender, after part-time chairman Atanu Chakraborty resigned on March 18, 2026 citing practices not in congruence with his values and ethics, followed by an 8.7 percent one-day fall in the stock on March 19. The presenter explains three layers of the problem as he sees them: the sale of Credit Suisse AT1 bonds to NRI clients through the Dubai branch, margin pressure after the 2023 merger with HDFC Limited, and loans growing faster than deposits. Sponsor: Odoo, whose Odoo Expenses tool is promoted in the video, and Think School's Communication course is also plugged. The captions cover the full video. All figures and allegations are the presenter's account of media reports and the speakers' own claims, not independently checked. This is an explainer, not financial advice.
Key Takeaways
The resignation
He says chairman Atanu Chakraborty resigned on March 18, 2026, citing values and ethics, and later told NDTV Profit there was no wrongdoing.
The market reaction
He says the stock fell 8.7 percent on March 19, hit a 52-week low of 750 rupees on March 23 and 731 rupees by March 30.
AT1 bonds explained
He explains that AT1 bonds pay higher interest with no end date and can be written down to zero, unlike a normal bond.
The Dubai bond sales
He says that from May 2021 the Dubai branch sold Credit Suisse AT1 bonds to NRI clients, reportedly pitched as safe with 10 to 13 percent returns.
The write-off
He says after Credit Suisse collapsed in March 2023, Swiss regulators ordered a write-off of about 17 billion dollars, later overturned by a court, with the bonds trading near 30 percent of face value.
Merger squeeze
He says the merger brought a large home loan book without enough cheap CASA deposits, cutting net interest margin from about 4.1 percent to near 3 percent.
Reserves and ratios
He says CRR and SLR rules, which do not apply to NBFCs, tie up about 21 percent of new deposits, and the loan to deposit ratio rose to about 110 percent before easing to 98.5 percent.
The Conversation Breakdown
The resignation
⏱ Untimed topicHe says chairman Atanu Chakraborty resigned on March 18, 2026, citing values and ethics, and later told NDTV Profit there was no wrongdoing.
The market reaction
⏱ Untimed topicHe says the stock fell 8.7 percent on March 19, hit a 52-week low of 750 rupees on March 23 and 731 rupees by March 30.
AT1 bonds explained
⏱ Untimed topicHe explains that AT1 bonds pay higher interest with no end date and can be written down to zero, unlike a normal bond.
The Dubai bond sales
⏱ Untimed topicHe says that from May 2021 the Dubai branch sold Credit Suisse AT1 bonds to NRI clients, reportedly pitched as safe with 10 to 13 percent returns.
The write-off
⏱ Untimed topicHe says after Credit Suisse collapsed in March 2023, Swiss regulators ordered a write-off of about 17 billion dollars, later overturned by a court, with the bonds trading near 30 percent of face value.
Merger squeeze
⏱ Untimed topicHe says the merger brought a large home loan book without enough cheap CASA deposits, cutting net interest margin from about 4.1 percent to near 3 percent.
Reserves and ratios
⏱ Untimed topicHe says CRR and SLR rules, which do not apply to NBFCs, tie up about 21 percent of new deposits, and the loan to deposit ratio rose to about 110 percent before easing to 98.5 percent.
Core Frameworks & Ideas
Three-layer diagnosis - the presenter's frame
Separate a bank's problem into product-selling conduct, structural margin and growth balance.
CASA versus FD funding - his margin example
Cheap deposits lift margin, expensive fixed deposits shrink it.
Trust as an asset - his conclusion
In banking, a trust deficit can become an existential problem.
Actionable Next Steps
- ✓Read the difference between a normal bond and an AT1 bond before judging any bond pitch.
- ✓Ask what happens to your money if the issuer fails before accepting a high promised yield.
- ✓Check how a bank funds its loans, using CASA share and loan to deposit ratio.
- ✓Treat the numbers as the presenter's account of media reports and verify them before repeating them.
Notable Quotes
“This contradiction is what made everything worse.”
“in banking, trust is the most valuable asset.”
“a normal bond is a standard contract.”
The One Thing to Remember
The presenter argues HDFC Bank's trouble comes from three layers: Credit Suisse AT1 bond sales, post-merger margin and reserve pressure, and loans outpacing deposits, which together create a trust problem.