Insider Jagdishan to take over reins at HDFC Bank
55-year-old had strong backing of current MD Aditya Puri as successor
After months of speculation, HDFC Bank on Tuesday named Sashidhar Jagdishan new managing director and chief executive officer (CEO) who would take over from India’s longest-serving CEO Aditya Puri when he retires on October 26. Jagdishan, 55, joined the bank in 1996 and heads finance, human resources, and some other departments. In August last year, he was named “change agent” in the bank, and it is understood he had the strong backing of Puri as successor. Kaizad Bharucha, head of HDFC’S wholesale banking division, and Sunil Garg of Citibank were among the other candidates in the race for the post.
The RBI’S approval came late in the night on Monday, and the bank notified the exchanges on Tuesday.
Since Jagdishan’s name was at the top of the list sent by the bank, it was a foregone conclusion that he would head the bank. The central bank, typically, does not do value judgments on candidates but goes by the hierarchy. If the candidate passes the “fit and proper” criterion, his name is approved. Jagdishan is a chartered accountant and holds a master’s degree in economics of money, banking, and finance from the University of Sheffield, UK, the bank said in its statement. The stock market gave the thumps up to the appointment of an internal candidate because that would ensure continuity in the bank.
The share price of the bank rose 3.81 per cent to close at ~1,040.20 a piece on the BSE. “In an uncertain environment like this, we believe an internal candidate who is in sync with the outgoing CEO is the right choice,” said Macquarie analyst Suresh Ganapathy. In a television interview, Puri said his successor “is humane, cares about people and a very thorough executor, and he understands the business”.
According to Puri, the bank’s strategy now is based on a secular shift in telecommunications and computing, artificial intelligence, and social mobility, which have changed the world, something which Jagdishan can carry forward well.
In his new role, Jagdishan should make it a priority to give more thrust to digitisation.
“We are 90 per cent there and it has taken us into the interior of the country. In the next three-four years we will have bank within a bank approximately. The second is increasing the penetration of credit products in semi-urban and rural areas; third, training people, especially for digital banking; fourth, widening the product range for customers,” Puri said.
Analysts said appointing an internal candidate was good for the bank, but it would not be easy to come out of the shadow of Puri, who served the bank as CEO for 26 years, since September 1994.
Under Puri, the bank’s net profit has grown from ~80 lakh in FY95 to ~26,257 crore in FY20. For the first quarter of this financial year, profit was ~6,658 crore.
Its market capitalisation was ~805 crore in 1995 and has touched ~5.85 trillion in the first quarter of 2020-21.
Besides, the processes are set in such a way that it would take several quarters before Jagdishan’s imprint can be seen on the bank, insiders say. In the latest annual meeting, Puri assured investors that the new successor would be an old hand with more than 25 years of experience in the bank. He said there was no need to be concerned about training and business understanding of the candidate, because he has “learnt very well”. While several of the senior management team recently left the bank, analysts pointed out that had always been the case with the organisation.