HDFC Bank, the country’s largest private-sector lender, is weighing internal and external candidates to fill the top post after managing director and CEO Sashidhar Jagdishan decided not to seek reappointment when his second term ends in October.
According to sources, the bank may consider deputy managing director Kaizad Bharucha for the full-time MD and CEO position, while simultaneously evaluating candidates from outside the organisation. Banks typically submit multiple names to the RBI for consideration and approval.
The private sector lender said on Saturday that it would fast-track the appointment of Jagdishan’s successor. It did not elaborate on the reasons behind Jagdishan’s decision. He has headed HDFC Bank since October 2020.
Bharucha, who oversees the bank’s retail and wholesale businesses, is not due to retire until 2029, making him one of the potential internal candidates for the top job.
The leadership transition comes against the backdrop of heightened scrutiny of HDFC Bank’s senior management and governance practices. Earlier this year, the bank’s part-time chairman and independent director Atanu Chakraborty resigned abruptly. In his resignation letter, Chakraborty said certain operational practices and internal developments at the bank did not align with his “personal values and ethics”.
His departure triggered speculation about boardroom differences, governance practices and the future of Jagdishan, whose second term was already under scrutiny.
HDFC Bank subsequently commissioned an independent legal review of the governance concerns Chakraborty raised. The bank said the review found no substantiated evidence of governance failure.
The lender later appointed former finance secretary Rajiv Kumar as part-time chairman for a three-year term, after veteran HDFC executive Keki Mistry briefly served as interim chairman. The appointment of a new CEO is expected to be closely watched by investors, with analysts saying the choice could determine whether the bank is able to draw a line under recent governance concerns.
“We believe that Jagdishan not seeking a reappointment removes the risk of him getting a truncated tenure by the RBI, which would have just prolonged the uncertainty and would have continued to weigh on the stock price,” Rikin Shah, senior vice-president at IIFL Capital, said, according to a Bloomberg report.
A credible external candidate could provide a leadership reset and a longer runway to steer the bank, Shah said.
Macquarie analysts last week said uncertainty surrounding Jagdishan’s tenure had been weighing on the stock.
