Most valuable Indian lender HDFC gets new CEO after 26 years
The Reserve Bank of India cleared Jagdishan’s appointment for a three-year term starting Oct. 27, HDFC Bank said in an exchange filing on Tuesday.Updated: Aug 04, 2020 21:54 IST
HDFC Bank Ltd. named Sashidhar Jagdishan as its new chief executive officer, breaking almost three decades of continuity under his predecessor at a time when the coronavirus pandemic is roiling India’s financial sector.
The Reserve Bank of India cleared Jagdishan’s appointment for a three-year term starting Oct. 27, HDFC Bank said in an exchange filing on Tuesday. He replaces Aditya Puri, who had 26 years at the helm and will retire when he turns 70, the age limit set by the RBI for private-sector bank chiefs.
“I fully recognise that Puri’s are huge shoes to fill,” Jagdishan said in a separate press release. “I’ll leave no stone unturned to carry forward the rich legacy.”
Jagdishan, 55, will face the challenge of maintaining HDFC Bank’s relatively high asset quality and loan growth as the pandemic sends the Indian economy into a deep slump. The nation’s biggest lender by market value has managed to skirt a two-year-old shadow-banking crisis under Puri. HDFC Bank shares advanced 4% in Mumbai on Tuesday.
“The announcement of a successor should finally put to rest the uncertainty and speculation regarding succession planning at the bank,” said Saswata Guha, head of financial institutions’ ratings at Fitch Ratings. “He does have an edge as an insider, which is a positive for the business, but his ability to deliver continued superior performance -– that HDFC Bank is synonymous with -- is probably what will be most keenly watched.”
Read about HDFC Bank’s latest earnings
Widely known as Sashi, Jagdishan left Deutsche Bank AG to join HDFC Bank in 1996 as a manager in the finance department. He rose through the ranks to become chief financial officer and is currently the group head overseeing finance, human resources, corporate communications and corporate social responsibility.
“While his appointment has been cleared for three years as of now, he should have about a 15-year career ahead of him – until he turns 70 – and this should offer continuity as well,” according to a note by Jefferies Group LLC.
Jagdishan, a physics graduate who went on to become a chartered accountant and then completed his masters in money, banking and finance from the University of Sheffield, is more in the mold of the modern banker who depends on his team to fulfill his vision.
That is unlike Puri, who is seen as more hands-on, according to people who know both the men. Jagdishan has focused mainly on managing the money, while Puri has participated in lending decisions or winning business from clients, the people said, asking not to be identified in order to speak freely.
Jagdishan has been traveling to various branches over the past year with Puri’s blessing, to understand the bank’s business better, they added.
Jagdishan will have to create his own management team after some veterans recently left the bank, including vehicle-lending head Ashok Khanna. The RBI has asked HDFC Bank to provide details of an internal investigation into allegations of improper lending at that business.
Jagdishan “understands the bank’s ethos, culture which has made it what it is,” Puri said in the press release. “Given our inherent strengths and now Sashi’s leadership, I believe that the best of the bank is yet to come.”
(Updates with Jagdishan’s comments in third paragraph, Puri’s comment in twelfth.)
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