Banking leadership shake-up: HDFC Bank, Ujjivan SFB begin CEO search

At HDFC Bank, the succession process assumes greater significance after managing director and chief executive Sashidhar Jagdishan opted out of the reappointment process last month

New Delhi: HDFC Bank and Ujjivan Small Finance Bank have begun scouting for suitable candidates to be appointed as their new MD and CEO to drive the next phase of growth.

Kotak Mahindra Bank and Fino Payments Bank are reportedly in the advanced stage of the appointment process.

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The process began at Fino after its MD and CEO, Rishi Gupta, was arrested in February in connection with alleged violations of the Goods and Services Tax (GST) laws. Soon after the arrest, Ketan Merchant, Chief Financial Officer of the bank, was appointed as interim head, and the board initiated the process for replacement of Gupta.

The next surprise was Kotak Mahindra Bank MD and CEO Ashok Vaswani, who backed out of an extension in June. His initial three-year term would end on December 31, 2026. It is being reported that the bank has shortlisted some internal candidates for the top job.

As per the process, the board of a bank shortlists a couple of names for the top executive position. Once finalised, the shortlisted names are sent to the Reserve Bank of India (RBI) for its approval. After thorough examination, the RBI gives its nod.

Earlier this month, Ujjivan Small Finance Bank’s MD and CEO Sanjeev Nautiyal sought early retirement compelling the board to look for his replacement. Nautiyal, former deputy managing director of SBI, was appointed as MD and CEO of Ujjivan Small Finance Bank (SFB) for three years with effect from July 1, 2024.

At HDFC Bank, the succession process assumes greater significance as last month its managing director and chief executive Sashidhar Jagdishan opted out of the reappointment process. Jagdishan, 61, decided not to seek reappointment after the completion of his current term on October 26. He has spent nearly three decades at the bank in various capacities.

The HDFC Bank board had said that it will fast-track the process for selection and appointment of Jagdishan’s successor “well within time”. Jagdishan’s reappointment has been a subject of intense speculation, especially after the surprising resignation of non-executive chairman Atanu Chakraborty in March this year, citing concerns on ethics and governance practices at the lender.

In late July, the bank board found shortcomings in the deposit arrangements with the Maharashtra State Road Development Corporation (MSRDC) and also slapped a fine of Rs 1 lakh each on Jagdishan and other key executives, even though it said that their actions were not mala fide. It was alleged that the bank paid, over and above the card rate, for getting high-value deposits from the state-run body and routed them as marketing spends.

Besides, the bank has faced allegations of mis-selling Credit Suisse’s AT-1 bonds to diaspora clients from its Dubai DIFC branch, which led the local regulator to prohibit the bank from onboarding new customers or conducting new business last year.

There have also been reports of non-resident Indians being stuck with over USD 100 million in investments in a platform floated by Carlisle Asset Management sold as a high-yield product, but clients are unable to redeem their investments.

During his tenure, Jagdishan had also faced allegations of graft in the Lilavati Hospitals matter, which was eventually dismissed by the Bombay High Court.

The RBI slapped an ’embargo’ on HDFC Bank in December 2020, prohibiting the bank from sourcing any new credit cards and launching new digital initiatives due to recurring technology system outages. The management under Jagdishan ensured that the embargo was completely lifted in 15 months.