Sashidhar Jagdishan, MD & CEO of HDFC Bank, has decided not to seek reappointment when his term ends on October 26, the country’s largest private sector lender said in an exchange filing on Saturday.
Jagdishan, who has spent 27 years at the bank, stuck to his decision despite the board urging him to reconsider.
“At its meeting held today, the Board of Directors took note of Mr Sashidhar Jagdishan’s communication to not seek reappointment. Despite persuasion, Mr Jagdishan reiterated his decision to not seek reappointment,” the bank said.
The board will now fast-track the search for a successor, aiming to complete the selection and appointment process well before Jagdishan steps down.
According to a media report, HDFC Bank’s newly-minted Chairman Rajiv Kumar met Reserve Bank of India (RBI) Governor Sanjay Malhotra last week, with sources saying the meeting was primarily aimed at assessing the board’s position on Jagdishan’s reappointment.
Jagdishan’s six-year tenure has been marked by the landmark merger with Housing Development Finance Corporation (HDFC), as well as a series of regulatory, legal and governance challenges.
He took charge as MD & CEO on October 27, 2020, succeeding Aditya Puri, who had led HDFC Bank since its inception. While Jagdishan’s tenure included the merger of HDFC Bank with its parent HDFC—one of the largest transactions in corporate India—it also faced scrutiny following regulatory interventions and governance-related controversies.
Barely two months after he took charge, the Reserve Bank of India (RBI) in December 2020 barred HDFC Bank from adding new credit card customers and launching new digital initiatives following repeated technology outages. The restrictions, were subsequently lifted in phases.
The bank later faced scrutiny over the alleged mis-selling of Credit Suisse’s Additional Tier-1 (AT1) bonds through its overseas operations. The issue eventually led to regulatory action against its Dubai branch and disciplinary action against several executives. More recently, HDFC Bank’s Dubai operations have also faced allegations of mis-selling linked to the Carlisle Luxembourg Life Fund.
An internal review of the bank’s dealings with the Maharashtra State Road Development Corporation (MSRDC) found “business overreach” in certain transactions involving deposits and marketing payments. The bank subsequently imposed penalties and issued warnings to Jagdishan and two other senior executives.
The review, however, concluded that the employees’ conduct “constituted business overreach rather than any mala fide action, personal enrichment, or improper motive.”
The episode followed another governance controversy earlier this year. Former HDFC Bank chairman Atanu Chakraborty resigned in March, citing differences over “values and ethics”. The bank later said an external review did not substantiate the allegations made by Chakraborty.
Jagdishan’s decision also comes at a difficult time for HDFC Bank’s stock. On Thursday, the shares fell to their lowest level in two-and-a-half years, wiping out $2.6 billion in market value by the close of trade. The stock has lost more than a quarter of its value this year and is headed for its worst annual performance since 2008.
The shares recovered 1.1% on Friday to close at Rs 720 on the BSE.