India’s largest private lender was not expecting to start its new leader hunt quite yet. But Sashidhar Jagdishan’s decision on Saturday to not seek a new term as chief executive when his tenure ends in October has suddenly put HDFC Bank in transition mode. Deputy managing director Kaizad Bharucha is widely expected to don the mantle of an interim chief till a full-time executive is picked and gets a regulatory nod.
The transition comes barely five months after another unexpected exit at the top. In March, then chairman Atanu Chakraborty resigned, citing “certain happenings and practices within the bank” that were “not in congruence” with his personal values and ethics. He did not elaborate, and a subsequent legal review found no evidence to substantiate his broader concerns. That episode had barely receded when Jagdishan’s decision put the ₹11.1-trillion HDFC Bank’s leadership back in focus.
For the 61-year-old Jagdishan, this marks the end of his three-decade long association with the bank, where he rose through the ranks, having started off as a finance manager.
According to a person aware of the discussions, the bank will soon appoint a search firm to look for Jagdishan’s replacement. The Reserve Bank of India (RBI) typically wants banks to list a mix of external and internal candidate names for approval, and HDFC Bank will not be an exception.
The person said the board had requested Jagdishan to reconsider his decision, but he declined. In his letter to the board, the chief executive said it had been six years since he took the top job and the bank had made progress in technology, risk management, among other areas, the person said. Jagdishan also told the board that recent issues were behind them, the person added.
'Tis the season
“This is the season of early resignations in the corporate and financial services world,” said Abizer Diwanji, founder of strategic advisory provider Neostrat Advisors.
Diwanji was referring to the recent decisions by Tata Sons chairman Natarajan Chandrasekaran and Kotak Mahindra Bank chief executive Ashok Vaswani to also not seek reappointment earlier this month.
“For HDFC, this does not end the uncertainty but is perhaps the beginning, at least till a full-time CEO is not appointed,” said Diwanji.
He said, given that there are only two months to go, it is likely that the board will appoint an interim CEO and start the search process for a full-time executive. “The bank has been in focus of late for a lot of things, and I hope a new chief can steer it out of the crisis.”
What changed
Interestingly, Jagdishan seems to have changed his mind on offering himself for another term. In March, in an interview to Mint, the chief executive had said he was willing to take on another term.
“Am I a willing candidate? Yes. I do not want to comment prematurely on the process, because it is the prerogative of the board and the regulator to provide the necessary approvals, but I am committing that I am willing,” he had said.
According to some people aware of the development, Jagdishan had got indications that the board was not keen on his reappointment or that he could get a truncated term, and his current term was set to end in just two months' time. According to the second person aware of internal discussions, Sashi decided not to offer himself for reappointment because he did not want the ignominy of a shorter term, or worse, a rejection by RBI.
“Nobody clearly knows what RBI thinks on such issues and the central bank’s stance is not easy to gauge,” said the second person.
The bank, however, rejected these reasons for his sudden annoouncement. “The reasons cited by you for Mr Jagdishan not seeking a new term are totally false and inaccurate," a spokesperson for HDFC Bank said in response to emailed queries.
The placeholder?
Widely expected to be the interim CEO, the 60-year-old Bharucha has spent 31 years at the bank and took on the role of deputy managing director in April 2023.
A commerce graduate from Sydenham College of Commerce and Economics, University of Mumbai, Bharucha has been at the bank since its inception.
Experts said Bharucha comes with a tenure constraint for the bank to consider him for the top job. RBI rules cap the total time an executive can serve as a whole-time director, including as managing director and chief executive, at 15 years. Since Bharucha joined HDFC Bank’s board in 2014, that would leave him only until 2029, giving him a relatively short runway as a full-time chief executive.
“Internally, deputy managing director Kaizad Bharucha can be recommended for managing director position - though (he) could get a shorter term due to RBIs rule of whole-time director max term of 15 years,” said Anand Dama, executive director, head of banking and financial services research at Nuvama Institutional Equities.
This, said Dama, is easy, faster and a pragmatic solution, which will provide the bank time to groom someone internally or externally, and lead to minimal business disruption.
Jagdishan's slot is not the only top post the bank needs to fill.
Proxy advisory firm Institutional Investor Advisory Services India Ltd (IiAS) said in a note on Sunday that HDFC Bank’s leadership challenge is further complicated by other impending vacancies across the executive suite and the board.
“V.S. Rangan, described as a ‘safe pair of hands’, who moved from HDFC Ltd to the bank, has his term ending in November 2026,” it said, adding that the coming months will be defining for the top lender.
“Although it has long been viewed as one of India’s best-managed financial institutions, the events of 2026 have exposed weaknesses in its governance framework. Rebuilding investor confidence will take more than assurances that the financial impact was immaterial,” the proxy advisory firm said.
Number speak
HDFC Bank, once seen as the darling of the equity markets, has lost quite a bit of its appeal as against its peers. The numbers are telling.
Since Jagdishan joined and till the end of Friday, 28 August, the bank’s stock has returned 27.72%, as against 266.67% for rival ICICI Bank. Its valuation has also weakened over time, down from a price-to-book value of 3.2 times when Jagdishan took over in 2020, to 1.8 times now, while ICICI Bank's ratio improved from 1.8 to 2.7 at present.
During Jagdishan's tenure, the bank’s loanbook tripled to ₹30.6 trillion, while deposits expanded 2.6 times to ₹31.7 trillion as on 30 June. The asset side expanded faster owing to the 2023 merger, where it took into its fold parent HDFC Ltd, while the deposits did not grow in tandem since the mortgage lender did not have a large deposit book. Over the same period, ICICI Bank’s loan book has grown 2.5 times and deposits expanded 2.2 times.