HDFC Bank's managing director and CEO, Sashidhar Jagdishan, is set to retire on October 26, concluding a challenging six-year tenure marked by significant regulatory hurdles, a historic merger, and ongoing governance and compliance issues.
Key Points
- Sashidhar Jagdishan, MD and CEO of HDFC Bank, will retire on October 26, opting not to seek reappointment after a six-year tenure.
- His leadership faced significant challenges, including RBI restrictions on credit card issuance and digital initiatives in 2020 due to service outages.
- The merger of HDFC Ltd with HDFC Bank in 2023 created a funding challenge, pushing the bank's credit-deposit ratio to 110 per cent.
- Jagdishan's tenure was also marked by governance issues, including the resignation of chairman Atanu Chakraborty and allegations of illegal payments to MSRDC.
- The bank's Dubai operations also faced scrutiny over alleged mis-selling and delayed redemptions of investment products.
Sashidhar Jagdishan, 61, faced one crisis after another during his six-year tenure as managing director (MD) and chief executive officer (CEO) of HDFC Bank.
He succeeded the venerable Aditya Puri, who had been the bank's MD from its inception in 1994 until 2020 — 26 years at the helm.
Within months of taking charge, India's largest private-sector lender faced the Reserve Bank of India's wrath.
Regulatory Challenges and Merger Impact
In December 2020, the regulator barred HDFC Bank from issuing new credit cards and launching new digital initiatives after repeated outages in its internet and mobile banking services.
The bank took 15 months to resolve the issues and emerge from the restrictions. Jagdishan's biggest business challenge came with the merger of HDFC Ltd with HDFC Bank, effective July 1, 2023 — the biggest amalgamation in the Indian banking sector.
The merger created a funding challenge for the bank: HDFC Bank inherited HDFC Ltd's large loan book without a commensurate deposit base, pushing its credit-deposit ratio to about 110 per cent.
The bank was subsequently forced to moderate loan growth and step up deposit mobilisation, weighing on growth and shareholder returns.
Governance Issues and Legal Scrutiny
The business challenges then moved into the realm of governance when part-time chairman Atanu Chakraborty resigned in March this year, saying certain happenings and practices within the bank were "not in congruence" with his personal values and ethics.
Chakraborty had served as chairman since May 2021 and had been reappointed for a three-year term from May 2024.
HDFC Bank later said independent legal reviews by Wilson Sonsini Goodrich & Rosati and Wadia Ghandy & Co. found no evidence to substantiate Chakraborty's allegations.
The bank appointed former finance secretary and former chief election commissioner Rajiv Kumar as its new part-time chairman in June this year.
Another governance issue emerged around the bank's dealings with the Maharashtra State Road Development Corporation (MSRDC).
In May this year, The Indian Express reported that an internal vigilance investigation had found that about Rs 45 crore was paid to MSRDC during 2023-24 and 2024-25 through marketing expenses classified as "differential interest".
HDFC Bank denied any wrongdoing.
Following an internal review of the bank's arrangements with MSRDC to garner deposits in 2017 and 2021, the board in July issued warning letters and imposed a Rs 1 lakh penalty each on Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan, and Group Head-Retail Assets Arvind Vohra.
The board said that the lapse was not mala fide and amounted to business overreach rather than misconduct.
The matter, however, escalated. In August, two law firms filed a proposed federal securities class action in a US district court against HDFC Bank and two of its executives over alleged illegal payments to MSRDC to induce large deposits.
HDFC Bank's Dubai operations also continued to face scrutiny.
In August this year, more than 75 clients who had purchased Carlisle Luxembourg Life Fund through the bank's Dubai operations were planning to approach the Prime Minister's Office, the RBI, and overseas regulators over alleged mis-selling, losses, and delayed redemptions.
Jagdishan's Departure and Legacy
Against this backdrop, Jagdishan told the HDFC Bank board in August that he did not wish to seek reappointment and would retire at the end of his current term on October 26.
Jagdishan joined HDFC Bank in 1996 as a manager in the finance function and became business head-finance in 1999.
He was appointed CFO in 2008 and, in 2019, was made the bank's "strategic change agent".
Before becoming MD and CEO, he was group head, overseeing finance, human resources, legal and secretarial, corporate communications, infrastructure and administration, and corporate social responsibility.
Jagdishan may not be directly responsible for many of the issues during his tenure.
But his decision to step down closes a six-year chapter at HDFC Bank marked by regulatory restrictions, a historic merger, and a series of governance and compliance challenges.
Jagdishan has 33 years of experience.
He holds a bachelor's degree in science with a specialisation in physics, is a chartered accountant, and has a master's degree in economics of money, banking, and finance from the University of Sheffield, UK.
