In its separate exchange filing over the weekend, HDFC Bank stated that despite persuasion by the board, Jagdishan decided to stick to his decision of not seeking re-appointment.
The board has also decided to fast-track the selection process for Jagdishan’s successor, well within the stipulated timeframe.
Sources have told CNBC-TV18 that at least two board members were in favour of a leadership change at the bank, although the matter was not put to vote.
The board had already initiated a search for external talent for its second line of succession even before Jagdishan announced his exit, and will consider both internal and external candidates for the role, the sources added.
Although HDFC Bank’s current Deputy Managing Director Kaizad Bharucha emerges as a key internal contender, the 15-year cap imposed by the Reserve Bank of India on the tenure of a Whole-Time Director in a private bank imposes a limitation. Bharucha has been on the board since 2014 and will see the end of his term in 2029. He has been Deputy MD since April 2023.
Also Read: HDFC Bank: Challenge of selecting the next CEO and challenges for the next CEO
HDFC Bank’s shares have been in the spotlight ever since former Part-time Chairman Atanu Chakraborty quit in March this year, citing differences over certain practices that were against his values and ethics, raising governance questions at the lender.
The stock currently trades at a 52-week low, and has already corrected more than 25% this year, even though an independent legal review of Chakraborty’s complaints found no evidence to substantiate the same.Recently, the stock faced further pressure after MD & CEO Jagdishan and other senior executives were penalized by the board for their handline of the MSRDC deposit pricing, concluding that this may have been “business overreach”, but did not carry any mala fide intention.
HDFC Bank reported its strongest deposit growth in the last five years during the June quarter, which had led to a revival in the stock after Chakraborty’s exit. However, the results showed a significant pressure on its Net Interest Margin, which fell to an all-time low of 3.26%.
Shares of HDFC Bank had ended 1.2% higher on Friday at ₹719.5. The could possibly see its first negative annual returns after more than a decade in cases the year-to-date losses of 27% hold.
Also Read: Uncertainty halves at HDFC Bank, with many questions unanswered
