Sashi, as he is called by colleagues in HDFC Bank, joined the institution in 1996 as a manager in the finance function. HDFC Bank wasn’t a very well-known name back then
For the last few months, there were rumours within the HDFC Bank about an insider succeeding Aditya Puri as its new Managing Director and CEO. No one knew for sure though.
The rumors, however, gained momentum after Puri himself left hints in public that he preferred an insider as successor at the bank. In the last AGM of the bank, Puri made it even clearer when he said his potential successor has been around for the last 25 years.
At this point, the name wasn’t hard to guess. There were only two that fit this description in the list the bank sent to RBI: Sashidhar Jagdishan and Kaizad Bharucha.
Even after all this, when the announcement finally happened on August 4 confirming Jagdishan’s name, the news came as relief to many senior management personnel within the bank. Reason: Anyone from outside would have taken his own time to get familiar with the bank's culture. That would have perhaps proved costly for the bank in a tough industry environment.
Also, the entry of an outsider, particularly at the top level, was bound to upset at least some in the senior management team. In the recent past, private banks, which appointed outsiders as CEOs, have seen an exodus of talent from the senior level. Yes Bank being a case in point.
But Jagdishan’s appointment is a safe bet. He is unlikely to ruffle feathers at the top. Also, being an insider, he can hit the ground running. After all, the CEO designate of India’s largest private bank is a veteran with over 25 years of experience in the bank. He is a familiar face across most departments.
Shashi, as he is called by colleagues in HDFC Bank, joined the institution in 1996 as a manager in the finance function. HDFC Bank wasn’t a very well-known name back then. He joined the bank after a stint in Deutsche Bank as senior officer in its Country Financial Control Division in Mumbai. His entry into HDFC Bank happened two years after outgoing CEO Aditya Puri joined the bank (in 1994).
He rose through the ranks fast. He became Business Head ‐ Finance three years later in 1999 and was appointed as CFO in 2008. Jagdishan played a critical role in supporting the growth trajectory of the bank. He led the finance function and played a pivotal role in aligning the organisation in achieving its strategic objectives over the years.
Jagdishan is currently the Group Head of Finance, Human Resources, Legal & Secretarial, Administration, Infrastructure, Corporate Communications, and Corporate Social Responsibility. He has completed his graduation in Science with a specialisation in physics, and is a Chartered Accountant. He also holds a Master’s degree in Economics of Money, Banking & Finance from the University of Sheffield, UK.
When Jagdishan takes over as CEO of the bank he joined 24 years ago, his biggest challenge is to continue with the legacy of his illustrious predecessor, took charge as Managing Director in September 1994.
Puri has been instrumental in building the bank into India's largest private lender. An organisation which has stood its ground through various crises and intense competition from newer rivals. The bank has consistently delivered on growth and rewarded investors.
HDFC Bank was listed on the Bombay Stock Exchange on May 19, 1995. Between then and now, the market capitalisation of the bank has grown to Rs 5,73,569 crore from Rs 440 crore. During this period, total assets have grown to Rs 15.3 lakh crore from Rs 3,394 crore.
Total deposits grew to Rs 11.47 lakh crore in March from Rs 642 crore in March 1995 and total advances swelled to Rs 10.03 lakh crore from Rs 98 crore. The bank consistently grew at healthy rate, surprising most analysts.
Jagdishan’s biggest task is to safeguard that legacy and guide the bank to better growth. He is taking over at a time when the banking industry is in the midst of the COVID crisis.
COVID-19 hit the Indian economy at a time when it was already slowing for many quarters. Demand has plummeted and consumer sentiment is the lowest in many years. The pandemic impacted loan growth and poses a major threat to asset quality. Banks will see a spike in bad loans once the moratorium period gets over by August 31. HDFC Bank will also likely feel the heat of the COVID crisis.
As on June 30, about 9 percent of loans were under moratorium. Asset quality weakened during the first quarter as gross non-performing assets (NPA) climbed sequentially to 1.36 percent (from 1.26 percent). The management remains cautious. The new CEO will have to prepare for a likely stress on the books post the moratorium period.
The other challenge will be to safeguard the bank’s corporate governance standards. The bank recently sacked a few employees following an investigation into irregularities in the auto loan department. The charges were related to mis-selling or forced selling of GPS products to auto loan borrowers.
Rising number of fraudulent transactions in the banking system is another concern. HDFC Bank reported Rs 222 crore worth of frauds in FY20 from 7,580 cases as against Rs 498 crore from 5,484 cases in the preceding year.
Puri has been the face of HDFC Bank for more than two decades. He, along with his team, created a model that no bank could emulate in the following years. In that sense, Jagdishan has a tough assignment ahead.