Jagdishan’s Exit Opens Succession Race as HDFC Bank Shares Hit 30-Month Low
Jagdishan will retire on October 26 after deciding not to seek a third term, ending a six-year tenure during which he oversaw HDFC Bank’s merger with its former parent.
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HDFC Bank Chief Executive Sashidhar Jagdishan will step down when his second term ends on October 26, opening a closely watched succession contest at India’s largest private lender after months of governance concerns and pressure on its shares.
The stock initially climbed as much as 2.7% on Monday, August 31, as some investors viewed the leadership change as an opportunity for a reset. Those gains evaporated during the session, however, and HDFC Bank closed 1.6% lower at ₹709 on the National Stock Exchange, its lowest level in 30 months. The benchmark Nifty 50 fell 0.4%.
HDFC Bank shares have now lost 28.5% this year, with the decline accelerating after former chairman Atanu Chakraborty resigned in March and raised concerns about practices at the lender. An external legal review subsequently found no evidence supporting those concerns.
The bank disclosed on Saturday, August 29, that Jagdishan had decided not to seek another term despite efforts by the board to persuade him to continue.
“Despite persuasion, Mr. Jagdishan reiterated his decision to not seek reappointment,” HDFC Bank said in its stock exchange filing.
He will retire from the bank at the close of business on October 26. The board said it would fast-track the selection and appointment of his successor.
“While this removes the immediate reappointment uncertainty, the leadership overhang now shifts to the question of who succeeds him,” Reuters reported, citing Nomura analysts.
Jagdishan took charge in October 2020 and oversaw HDFC Bank’s 2023 merger with its former parent, mortgage lender HDFC Ltd. The transaction created one of India’s largest financial groups, but investors have questioned the benefits of the combination as profitability metrics and shareholder returns have lagged.
The leadership change follows a turbulent period at the lender. Chakraborty resigned as chairman in March, saying some practices at the bank conflicted with his personal values and ethics. In July, the board penalized Jagdishan and two other executives in a separate deposit-pricing matter after an internal review found that employees had engaged in “business overreach.”
Deputy Managing Director Kaizad Bharucha has emerged as the leading internal contender to replace Jagdishan. HDFC Bank is likely to submit Bharucha as one of two candidates for the position, Reuters reported, citing two unidentified people familiar with the matter.
Bharucha has been with HDFC Bank since 1995 and was appointed deputy managing director in April 2023. The veteran banker oversees the lender’s retail and wholesale businesses and has extensive experience in corporate banking, credit and risk management.
He is eligible to serve as chief executive until 2029, when he will complete 15 years as a whole-time director, the maximum tenure ordinarily permitted under Reserve Bank of India rules.
The RBI requires a bank seeking to appoint a new chief executive to submit a panel containing at least two names, listed in order of preference. The regulator has final approval over the appointment.
