India’s HDFC Bank CEO Jagdishan to step down in October

MUMBAI: India’s largest private lender HDFC Bank said on Saturday that its Chief Executive Sashidhar Jagdishan has decided not to seek reappointment when his term ends at the end of October.

Jagdishan had been expected to seek a third term, but the abrupt exit of a former chairman raised investor concerns about HDFC Bank, even though an external review concluded in June that there was no evidence to substantiate the governance issues the former chairman raised.

In July, the bank’s board penalised three top executives including Jagdishan after judging that employees involved in setting deposit rates for a state agency had engaged in “business overreach”.

“Mr. Jagdishan reiterated his decision to not seek reappointment. Accordingly, he shall retire from the services of the Bank upon the close of business hours on October 26, 2026,” the bank said in a statement to exchanges on Saturday.

The bank’s board said it will fast-track the process for appointing Jagdishan’s successor.

“The new CEO will have their task cut out given the ongoing challenges at the bank. They’ll have also to retain talent and ensure a seamless transition,” said Anand Dama, executive director at Mumbai-based brokerage firm Nuvama.

“My sense is that the likelihood of the bank getting an external candidate is higher,” he said.

HDFC Bank, in which foreign investors held nearly a 40percent share as of June, has seen its stock price fall 27percent since the start of the year with a large part of the losses coming after the former chairman’s abrupt departure in March.

Investors have also raised concerns over the lack of gains from a 2023 merger with its then parent HDFC Ltd.

The bank’s shares slipped to a more than two-year low on Thursday after a couple of US law firms filed a proposed federal securities class action suit.

The bank, in a statement to Reuters, said it “believes the lawsuit is without merit and intends to vigorously defend itself.”

G Chokkalingam, founder and head of research at market advisory firm Equinomics Research, said the bank’s stock could fall 2percent to 3percent on Monday in a knee-jerk reaction to the news.

“However, a bank with such a large and strong balance sheet will not find it difficult to attract good talent,” he said, adding that the lender now trades at less than twice its book value, making the stock attractive to long-term investors.

HDFC Bank reported a 5percent rise in standalone net profit of 190.60 billion Indian rupees ($2.0 billion) for the quarter ended June 30. Gross non-performing loans as a share of total loans are low at 1.17percent.