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Connecting the dots: Puri always wanted an insider, post Sukthankar’s exit Jagdishan was his favourite – Moneycontrol

Sashidhar Jagdishan, who has been named as new HDFC Bank CEO, was under consideration in April this year itself. This was part of the reasons that influenced the Reserve Bank of India’s (RBI) decision to put on hold key appointments of two key executives on the board including that of Jagdishan, according to people familiar with the development.

On 9 April, Moneycontrol had reported about possibilities of Aditya Puri’s successor being an insider after the lender on April 8 intimated stock exchanges that the RBI has put on hold the appointment of two key executives on the Board.

The RBI had said the appointment of Sashidhar Jagdishan and Bhavesh Zaveri each as Additional Director and Executive Director (Whole-Time Director) of the Bank should be put on hold until the new managing director and chief executive officer takes charge.

“We are now in receipt of a communication dated April 7, 2020 from Reserve Bank of India stating that since these are important positions in the Bank, the Bank is advised to examine and submit the proposal after a new MD and CEO assumes charge later this year. The Bank shall accordingly ensure compliance with Reserve Bank’s instruction as above,” said the bank in a filing to exchanges on April 8.

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Moneycontrol had reported that the RBI decision is significant considering that both Jagdishan and Zaveri are seen as strong contenders to the post of HDFC Bank’s managing director after Puri’s retirement slated in October this year.

Sukthankar’s exit a turning point

Till the time of his exit from the bank, Paresh Sukthankar, former Deputy Managing director of HDFC Bank and a trusted lieutenant of Puri was seen as a worthy successor to his boss. But Sukthankar surprised the markets by quitting in August 2018, thereby confirming the ensuing hunt for another candidate. The bank subsequently appointed Egon Zehnder for this purpose. “Post Sukthankar’s exit, the logical choice was Jagdishan. He was Puri’s choice too. Puri always wanted an insider to succeed him in the post,” said one of the persons quoted above. All of them declined to be named.

In the list of candidates sent by bank to RBI in May, Jagdishan’s name figured in the top. Puri, who was also part of the selection committee as an advisor to choose the new CEO strongly advocated Jagdishan’s candidature.

An old-timer, consensus candidate

Jagdishan joined the bank in 1996, just two years after Puri joined. His growth in the organization hierarchy was quick. In just three years 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.

HDFC Bank insiders say Jagdishan was the consensus candidate for the top job and part of the core team through the years of HDFC Bank’s evolution to the largest private bank in the country. “He is more of a finance person and a good team leader. His ascension to the CEO post will be win-win for all in the bank and for the investors. The biggest gain is continuity in business policies and organization culture which is a must in tough times,” said one of the persons quoted above.

The first challenge for Jagdishan as CEO would be to deal with the asset quality shock in the post moratorium period. The RBI moratorium ends by August 31. Analysts expect a major surge in NPAs in the subsequent quarters on account of tepid market conditions. HDFC Bank has around 9 per cent of its loan book under moratorium as on June 30.