The Reserve Bank of India (RBI) on August 4 cleared the name of Sashidhar Jagdishan as the next chief executive officer of HDFC Bank, according to a senior RBI executive who didn’t want to be named. “Jagdishan’s name has been approved,” the executive told Moneycontrol.
CNBC-TV18 was the first to report this story.
Jagdishan's selection confirms HDFC Bank’s outgoing Chief Aditya Puri’s recent comments that his successor will be an insider. “There has been a lot of talk about the successor not being with us for a long time. Our potential successor has been with us for 25 years. My successor was always in place, at least in my mind. It is now for RBI to decide,” Puri said at the bank’s recent AGM.
Jagdishan is currently serving as the additional director of HDFC Bank and has been with the bank for nearly three decades. Jagdishan served as the Group Head of Finance, Human Resources, Legal & Secretarial, Administration, Infrastructure, Corporate Communications and Corporate Social Responsibility.
He joined the bank around 1996 as a Manager in the Finance function, and then went on to become Business Head - Finance in 1999 and Chief Financial Officer in the year 2008.
Jagdishan, along with Kaizad Bharucha, another HDFC Bank senior executive, was among the top three names recommended by the bank to RBI early this year. The third name was Sunil Garg, CEO of Citi Commercial Bank.
Puri’s term is ending in October this year. Paresh Sukthankar, deputy managing director of HDFC Bank and a trusted lieutenant of Puri was seen as a worthy successor to his boss. But Sukthankar surprised the markets by quitting in August 2018, thereby confirming the ensuing hunt for another candidate.
Jagdishan will be taking over at a time when the banking industry is in the middle of a crisis following the onset of Covid-19. About 9 per cent of the HDFC Bank’s loan book is under moratorium as on June 30. The bank has admitted that COVID-19 has already taken a toll on the retail loan book.
“The continued slowdown in economic activity has led to a decrease in retail loan origination, sale of third party products, use of credit and debit cards by customers, efficiency in collection efforts and waivers of certain fees. As a result, fees/other income was lower by approximately Rs 2,000 crore,” the bank said announcing the first quarter results.
In the retail loan portfolio, the auto loan portfolio has shrunk to Rs 81,082 crore from Rs 83,935 crore while the home loan portfolio declined to Rs 62,652 crore from Rs 63,445 crore. Two-wheeler loans shrank to Rs 9,568 crore from Rs 9,855 crore. Clearly, the COVID-19 stress is visible on the books of HDFC Bank.
Also, the successor to Puri is entering at a time the bank is under the shadow of a controversy surrounding auto loan division. There were allegations that the bank’s vehicle financing division flouted rules to sell GPS devices bundled with auto loans. Post an internal investigation, the bank had sacked a few officials. Puri’s successor will have to take steps to send a message to the investors about good corporate governance standards in the bank.