HDFC Bank CEO Jagdishan opts out of reappointment amid governance concerns
HDFC Bank’s managing director and chief executive Sashidhar Jagdishan on Saturday opted out of being considered for reappointment after his current term ends on October 26, the largest private sector lender said in a regulatory filing.
Jagdishan, 61, will retire from the bank on October 26 after spending nearly three decades at the lender.
After taking over as the bank CEO in October 2020, Jagdishan is serving his second three-year term as the lender’s head.
The HDFC Bank board will fast-track the process for selection and appointment of Jagdishan’s successor “well within time”, the exchange filing said.
He conveyed his decision not to seek reappointment as the Managing Director and Chief Executive Officer and also reiterated the decision despite “persuasion” from the board, it added.
“The board deeply appreciated his commitment, leadership, contribution to the growth and stability of the Bank and his role in successful completion of one of the largest mergers in corporate India,” the filing said.
It also conveyed best wishes to Jagdishan in his future endeavours.
Jagdishan took over as the CEO of the bank from Aditya Puri, who had led the bank since its founding in 1995.
Within months, it announced the merger of its mortgage major parent, HDFC, with itself, leading to huge expansion in the asset book and worries over business performance, HDFC liability payouts and compressed net interest margins of the combined entity.
The management, however, said the merger will accrue benefits over the long term.
The issue of Jagdishan’s reappointment has been a subject of intense speculation, especially after the surprising resignation of non-executive chairman Atanu Chakraborty in March this year, citing concerns on ethics and governance practices at the lender.
In late July, the bank board found shortcomings in the deposit arrangements with the Maharashtra State Road Development Corporation (MSRDC) and also slapped a fine of Rs 1 lakh each on Jagdishan and other key executives, even though it said that their actions were not mala fide.
It was alleged that the bank paid, over and above the card rate, for getting high-value deposits from the state-run body and routed them as marketing spends.
Besides, the bank has also faced allegations of mis-selling Credit Suisse’s AT-1 bonds to diaspora clients from its Dubai DIFC branch, which led the local regulator to prohibit the bank from onboarding new customers or conducting new business last year.
In an interview after his sudden exit, Chakraborty rued that the bank did not act in time in the AT-1 bonds case, and compensation practices have to be in sync with value systems to ensure that any mis-selling does not happen.
There have also been reports of non-resident Indians being stuck with over USD 100 million in investments in a platform floated by Carlisle Asset Management sold as a high-yield product, but clients are unable to redeem their investments.
During his tenure, Jagdishan had also faced allegations of graft in the Lilavati Hospitals matter, which was eventually dismissed by the Bombay High Court.
The RBI slapped an ‘embargo’ on HDFC Bank in December 2020, prohibiting the bank from sourcing any new credit cards and launching new digital initiatives due to recurring technology system outages. The management under Jagdishan ensured that the embargo was completely lifted in 15 months.
