HDFC Bank Ltd.’s search for a new chief executive after Sashidhar Jagdishan’s surprise decision to step aside will test whether India’s largest private-sector lender can restore investor confidence and move past lingering governance concerns.
The announcement on Saturday that Jagdishan — a three-decade HDFC Bank veteran — won’t seek reappointment puts to rest months of speculation that he was eyeing an extension. His final day is Oct. 26. The board has to seek approval from the regulator to appoint a CEO who can be an internal or external candidate.
Jagdishan’s decision comes as the lender confronts a slew of issues that have placed its governance practices under intense scrutiny recently. HDFC Bank’s part-time chairman made an acrimonious exit earlier this year, and the lender had been grappling with the historic fallout from Credit Suisse’s Additional Tier‑1 bonds.
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Jagdishan took charge in 2020 when he succeeded Aditya Puri, who was at the helm for more than 20 years. He oversaw HDFC Bank’s balance-sheet expansion and its merger with the country’s largest mortgage financier in 2023.
“We believe that Jagdishan not seeking a reappointment removes the tail 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,” said Rikin Shah, senior vice president at IIFL Capital. A credible external candidate could provide a leadership reset and a longer runway to steer the bank, he said.
While HDFC Bank is India’s most valuable lender, with a market capitalization of about $116 billion, its shares have underperformed the broader banking index and some of its biggest peers. They have fallen 27% this year, against a 3.5% decline in the Nifty Bank Index, marking their worst relative under-performance since 2003.
