Speculation ends, Sashidhar Jagdishan is the new MD, CEO of HDFC Bank
Putting an end to the speculation surrounding who will succeed Aditya Puri at HDFC Bank, the country’s largest private sector lender on Tuesday named Sashidhar Jagdishan as the new MD and CEO for a period of three years.
Puri has headed HDFC Bank since its inception in 1994 and under his watch the bank has risen to become the second largest bank in the country, after State Bank of India, with a market capitalisation of close to Rs 6 lakh crore.
Puri is the longest serving CEO at any private bank in India and his term is set to end on October 26, when he reaches the maximum age limit of 70 years.
Who is Sashidhar Jagdishan?
Jagdishan is currently the group head of finance at HDFC Bank. He also heads various other functions, including human resources, legal and secretarial, administration, infrastructure, corporate communications, corporate social responsibility and strategic change agent.
Jagdishan was senior officer in the Country Financial Control Division of Deutsche Bank, AG, in Mumbai, and joined HDFC Bank in 1996 as manager in the finance function.
He then became business head—finance in 1999 and was appointed as the chief financial officer in 2008.
“He has played a critical role in supporting the growth trajectory of the bank. He has led the finance function and played a pivotal role in aligning the organisation in achieving the strategic objectives over the years,” HDFC Bank said in a statement.
The Reserve Bank of India has approved the appointment of Jagdishan as the MD and CEO of HDFC Bank and a meeting of the lender’s board will be convened in due course to approve his appointment, the bank added.
Jagdishan who has an overall experience of 30 years, completed his graduation in Science, with a specialisation in Physics and is a chartered accountant. He also holds a masters degree in Economics of Money, Banking, and Finance from the University of Sheffield, UK.
As a successor to Puri, Jagdishan has big shoes to fill and he takes charge at a time several challenges exist. There were reports recently that the bank had conducted an internal probe into irregularities in its vehicle financing business. Ashok Khanna, the former group head of secured vehicle loans, was denied an extension after receiving two extensions post-retirement, Bloomberg had reported.
Puri later said that a probe had not found any conflict of interest.
The current economic downturn amid the COVID-19 pandemic is also a cause of concern for the banking sector as such, with the RBI recently flagging the risk of a system-wide rise in non-performing assets, in the year ending March 2021.
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HDFC Bank reported a 20 per cent rise in first quarter net profit at Rs 6,658.62 crore, while net interest income rose 18 per cent to Rs 15,665 crore. Its provisions and contingencies surged 49 per cent and gross NPAs were at 1.36 per cent in April-June, versus 1.26 per cent in January-March.
"HDFC Bank has been able to deliver its usual earnings growth trajectory. However, the COVID-19 pandemic has induced volatility on certain operating parameters like fee income and opex. This in turn has heavily dented loan origination across retail segments. On the asset quality front, slippages are likely to pickup during second half of FY21 due to the COVID-19 disruption, which should keep credit costs elevated. However, higher provisioning buffers should limit the overall impact on earnings," analysts at Motilal Oswal Financial Services had said.
The appointment of a bank veteran to succeed Puri should give markets a comfort. His rich experience within the bank would be welcomed by all stakeholders, said Ajay Bodke, CEO and chief portfolio manager (PMS) at broking firm Prabhudas Lilladher.
“Appointment of an insider who has served within an organisation for years and has intimate knowledge about the systems and processess and has played a key role in instituting those systems is always an advantage during succession,” he added.
HDFC Bank shares surged more than 4 per cent to Rs 1,046.15 on the BSE, while the broader BSE Sensex rose 1.80 per cent or 665 points to 37,604.73.