HDFC Bank CEO Sashidhar Jagdishan to retire on Oct 26, will not seek third term

MUMBAI: HDFC Bank MD & CEO Sashidhar Jagdishan, chief of the country’s largest private lender, has decided not to seek a third term and will retire on Oct 26, bringing an unexpected end to a six-year tenure marked by a series of challenges, many of which had their origins before he took charge but came to roost during his tenure. Jagdishan conveyed his decision to the bank’s board on Saturday. The board, which had an unscheduled meeting, said it tried to persuade him to reconsider, but he reiterated his decision not to seek another term. This came months after Jagdishan had indicated that he was a candidate for a third term. He is understood to have met HDFC Bank chairman Rajiv Kumar early on Saturday. Those in the know said his decision may have been triggered by indications that a full third term was not forthcoming. Kumar is said to have been keen that Jagdishan should be more assertive while “cleaning up” the bank. The board, in a letter, thanked Jagdishan for his leadership and contribution to the bank’s growth and stability, as well as his role in completing the merger with HDFC Ltd, one of the largest corporate mergers in India. The board said it would fast-track the process of selecting and appointing his successor well before his retirement. Jagdishan’s decision comes after a difficult year for HDFC Bank, with a series of governance and operational issues putting the bank under scrutiny. The developments followed the resignation of former chairman Atanu Chakraborty, who stepped down citing “values and ethics”. After his resignation, the bank fired three senior executives and penalised several others over irregularities in the sale of high-risk bonds of failed Credit Suisse to non-residents 2019 -2022. In July, the bank fined Jagdishan, CFO Srinivasan Vaidyanathan and the head of its retail assets group Rs 1 lakh each over what the bank described as “business overreach” in obtaining bulk deposits from MSRDC. More recently, HDFC Bank came under fire from customers who had invested in a failed Carlisle fund that invested in acquired life insurance policies, mounting pressure on the bank. The developments added to a series of challenges that Jagdishan had faced almost from the beginning of his tenure. Soon after he took charge in 2020, RBI barred HDFC Bank from launching new digital products and issuing fresh credit cards after repeated technology outages. After the restrictions were lifted, Jagdishan had to steer the bank through the integration of HDFC Ltd. The merger, announced when interest rates were at historic lows and the banking system was flush with liquidity, became considerably more challenging as the Russian invasion of Ukraine triggered a sharp rise in interest rates and tighter liquidity conditions. Jagdishan, unlike his predecessor Aditya Puri, maintained a low-key public profile. He joined HDFC Bank’s finance department 1996; became business head-finance in 1999 and CFO in 2008. Puri backed Jagdishan as his successor when he stepped down in 2020. The succession was intended to provide continuity at a bank that had long been associated with Puri’s leadership. Instead, Jagdishan’s tenure was marked by a series of events that tested the bank on technology, integration, growth, liquidity and governance. His departure creates fresh uncertainty for HDFC Bank, but analysts said the uncertainty could be short-lived if the bank appoints a strong successor. A clear transition, they said, could be preferable to a situation where Jagdishan continued for a shorter or uncertain term.