HDFC Bank is expected to begin the formal process of reappointing Sashidhar Jagdishan for a third term as Managing Director and Chief Executive Officer, following the completion of an independent legal review into concerns raised by former chairman Atanu Chakraborty.
The move comes after two external law firms found no merit in the concerns highlighted by Chakraborty in his resignation letter. HDFC Bank disclosed the findings in a stock exchange filing on June 26.
Legal review clears pending hurdle
The bank's board had deferred the reappointment process until the legal review was completed.
In its exchange filing, HDFC Bank said records and witness interviews examined by the two law firms did not support Chakraborty's statements or their implications.
The bank said:
- The concerns raised were not supported by documentary evidence.
- Witness interviews were inconsistent with the claims.
- The review found no basis for the allegations.
The findings have reportedly removed a key obstacle to the board initiating the CEO reappointment process.
Board to begin succession process
Jagdishan's current term as Managing Director and CEO is scheduled to end in October.
According to the report, the bank's board is now expected to begin the formal process of recommending his reappointment.
However, the process remains subject to approval by the Reserve Bank of India (RBI).
The report noted the board's recommendation alone will not guarantee another term, as the banking regulator will make the final decision after reviewing the proposal.
Chairman appointment also moves forward
The legal review has also reportedly enabled the bank to move ahead with selecting a new non-executive chairman. According to The Economic Times:
- Former RBI Deputy Governor Rajeshwar Rao is among five shortlisted candidates for the chairman's role.
- The Nomination and Remuneration Committee will recommend three names to the RBI for approval.
- Keki Mistry, who is serving as interim part-time chairman, has received a three-month extension until September 18 from the RBI.
The appointment of a permanent chairman is expected to run alongside the CEO succession process.
Operational challenges remain
While the legal review has strengthened Jagdishan's prospects for another term, analysts cited in the report believe the RBI may also consider broader business and governance factors before granting approval.
One issue is the bank's loan-to-deposit ratio, which remains elevated following HDFC Bank's merger with HDFC Ltd in 2023.
The merger added a substantial mortgage portfolio funded largely through borrowings rather than deposits, resulting in a structurally higher credit-deposit ratio compared with many peers.
Improving this ratio has been one of the key operational priorities during Jagdishan's second term.
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