India’s largest private lender has settled its succession issue. HDFC Bank has announced that Sashidhar Jagdishan will be the new chief executive officer, replacing Aditya Puri, who will be retiring in October.
Fifty-five-year-old Jagdishan joined the bank in 1996 and is currently the group head, in charge of finance, human resources, and other departments.
Puri has been leading the HDFC Bank since it was formed in September 1994, and is the longest-serving head of any private bank in the country.
As part of the selection process, the bank had shortlisted two internal candidates, Jagdishan and Kaizad Bharucha, head of HDFC’s wholesale banking division, and one external candidate, Sunil Garg, from Citibank.
In the last annual general meeting, Puri had dropped a hint that his successor would be an insider with a good understanding of the bank. He had also allayed shareholders fears of any disruption.
When the bank reshuffled the top management in August last year, Jagdishan was made the head of all the bank’s important portfolios. Many observers saw this as a signal that he might succeed Puri.
The appointment of an insider to HDFC Bank’s top job has been welcomed by analysts. They see a semblance of continuity as Jagdishan has been with the bank for nearly 25 years and has been close to Puri. Hence no major changes in the bank’s functioning are expected. He is expected to serve for 15 years until he retires at the age of 70.
But Jagdishan faces a set of challenges. The bank recently witnessed some high-profile exits and hence he will have to rely on a new crop of managers to run the show.
The lender’s image was recently dented by the recent vehicle loan scam. HDFC Bank was accused of the forced selling of GPS products to auto loan borrowers. The staff of the bank’s auto loans department had allegedly forced customers to buy the GPS devices by bundling it with the car loan. It was found that some customers were not even aware they were purchasing such a product.
After an internal probe, the bank had terminated at least six senior and mid-level executives, including its auto division head, Ashok Khanna. However, an air of suspcion remains that there could be more to it. Jagdishan’s task will be to steer the bank out of this controversy.
He also needs to maintain the growth trajectory that Puri had accomplished for the bank. Investors will keep a close watch on how he accomplishes this.