HDFC Bank delays CEO reappointment decision amid legal review
What's the story
HDFC Bank's board is delaying the decision on CEO Sashidhar Jagdishan's reappointment. The delay comes as they await a legal review report into concerns raised by Atanu Chakraborty in his resignation letter. The move has left India's largest private-sector lender in a state of uncertainty over its leadership, with just four months remaining in Jagdishan's current term.
Review delay
Report submission delayed
The board's nomination and remuneration committee, led by Harsh Kumar Bhanwala, will only meet after the consolidated report is submitted. The submission has been delayed past its original internal timelines. In March, HDFC Bank had hired law firms Trilegal and Wadia Ghandy & Co to investigate board meeting minutes for possible discrepancies highlighted by Chakraborty. A US-based law firm was also engaged for this purpose, but their findings are yet to be finalized.
Term extension
Uncertainty looms over Jagdishan's reappointment
The delay in report submission has added to the uncertainty of Jagdishan's reappointment. His current term is set to end in October. Typically, bank boards approve CEO reappointments and seek Reserve Bank of India (RBI)'s approval six months in advance. However, this time, HDFC Bank's board had approved Jagdishan's current term only in March 2023, seven months ahead of the deadline.
Report expectations
Experts weigh in on situation
Despite the delay, sources don't expect any adverse findings against Jagdishan in the report. Abizer Diwanji, founder of strategic advisory provider Neostrat Advisors, said the six-month timeline for approval can be flexible. He added that the RBI can also fast-track approvals if required. Diwanji further explained that as long as there is transparency in governance and awareness about bank operations, it doesn't impact appointments from a regulatory perspective.
Resignation fallout
Chairman's abrupt resignation triggered crisis at HDFC Bank
Three months ago, HDFC Bank was thrown into a crisis when then-chairman Chakraborty abruptly resigned. His letter to the board cited "certain happenings and practices within the bank" that were "not in congruence" with his personal values and ethics. However, the bank has denied these allegations, saying Chakraborty "did not mention any happenings and practices which were not in congruence with his personal values and ethics."