HDFC Bank is in the middle of a significant reset, with the Rajiv Kumar-led board moving to clean up management issues, tighten succession planning and reshape the leadership team, with more changes expected, particularly at the management level.
The reset began taking shape in July, when former bureaucrat Rajiv Kumar took over as chairman. Kumar brings significant banking-sector experience to the role, having spent close to three years as Secretary, Department of Financial Services.
His appointment came at a difficult juncture for HDFC Bank.
The bank had been dealing with the fallout from Atanu Chakraborty's exit as chairman, while questions around leadership continuity and succession remained unresolved. At the same time, issues including the Dubai bond-mis-selling matter and the MSRDC deposit episode had added to the management and governance overhang.
The Dubai matter involved alleged lapses around the sale of AT1 bonds and led to action against executives. The MSRDC episode, meanwhile, resulted in the bank's board taking disciplinary action against senior executives, including MD & CEO Sashidhar Jagdishan and CFO Srinivasan Vaidyanathan.
The uncertainty was further heightened by the prolonged process over whether incumbent MD & CEO Sashidhar Jagdishan would be reappointed or whether the bank would look outside for a successor. In the middle of that process, Jagdishan announced in late August that he would not seek another term, forcing the board to move quickly on succession. Within about two weeks, the Rajiv Kumar-led board put forward two names to the RBI — external candidate Anup Bagchi and internal candidate Kaizad Bharucha — as its top contenders for the post.
Rajiv Kumar-led reset
Under Rajiv's leadership, the board has moved to tackle several of the bank's pending issues.
A top source at HDFC Bank said the bank has effectively been “reset” over the past two months, with most pending matters closed and several serious managerial issues addressed.
The reset has already resulted in changes in Compliance and HR leadership. The bank has also created an avenue for appointing a new Executive Director.
The source said concerns around groupism and gaps in succession planning have also been addressed.
And there is more to come.
Both the management and the board are expected to see some shake-up, with the bigger changes likely on the management side.
Bagchi is the next big move
The appointment of Anup Bagchi as MD & CEO is the clearest signal yet of the new direction.
The RBI approved Bagchi's appointment on October 1. He takes charge on October 27, replacing Jagdishan.
More importantly, Bagchi is the first outsider to take the top job at HDFC Bank.
That makes the appointment bigger than a routine CEO succession. It signals the board's intent to move the bank towards stronger institutional processes, a deeper leadership bench and more structured succession planning, rather than a system built around individual personalities.
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