Sashidhar Jagdishan ended up doing two things his high-profile predecessor, Aditya Puri, successfully avoided for 26 years: a merger with Housing Development Finance Corporation Ltd (HDFC Ltd), the illustrious parent, and running a promoter-less bank. Taking on the merger meant giving up the old credit-deposit ratio comfort and CASA (current and savings account) advantage that HDFC Bank had enjoyed for decades. He took it on; but what he probably did not bargain for was a host of legacy issues.
In effect, Sashi Jagdishan inherited what his predecessor spent decades postponing, and then spent six years taking responsibility for a lot of unfinished business. In Indian banking, reputations compound for decades but can re-price in a weekend. HDFC Bank's stock did both after Mr Jagdishan announced that he would not seek a third term, having reversed his position from March, when he told a newspaper that he was “willing and raring to go.” The board said it had tried to persuade him, but he retires on 26th October. HDFC shares rose initially on Monday (31st August), leading the Nifty 50, but ended in the red again by the end of the day, continuing its deep descent.
While the market is busy speculating who will take charge, it is worth asking a more basic question, one that will confront his successor as well: Did Sashi Jagdishan get a fair hearing, or did he spend two terms absorbing punishment for issues that were not really his?
My view is that he was treated more harshly than the facts justify. A good part of the ‘controversies’ he battled were legacy issues, bad luck and even other people’s failures. India’s regulatory culture and unending legal processes have ensured that he got less sympathy than a departing chief executive officer (CEO) may perhaps have received elsewhere in the world.
The Merger Nobody Else Would Do
Let’s start with the HDFC–HDFC Bank merger, completed on 1 July 2023, at a valuation of roughly US$40bn (billion). While attention is focused on stalled growth after the biggest amalgamation in Indian banking history, and on the underperformance of the stock, it is worth remembering how significant it was that the merger happened at all.
Recall that as far back as 2014, Aditya Puri told reporters that a merger ‘makes sense in the long run’, but that there was no proposal on the table. Mr Puri ran HDFC Bank for 26 years – from founding it in 1994 to 2020 – and the one transaction that would define its future did not happen under his watch. The decision may not have been his alone. Deepak Parekh, a towering figure in the Indian financial world, would also have played a role.
When the merger finally took effect in July 2023, HDFC Bank inherited HDFC Ltd’s enormous mortgage book without a matching deposit franchise, pushing the credit-deposit ratio to roughly 110% and forcing Mr Jagdishan to slow loan growth and chase deposits. This weighed on near-term profitability and irritated investors used to 20%+ growth.
RBI Crackdown: In December 2020, just weeks after Mr Jagdishan took charge, the Reserve Bank of India (RBI) barred the Bank from issuing new credit cards and launching new digital products as punishment for repeated outages in internet banking, mobile banking and payments. It was the harshest punishment possible, and the restrictions lasted until 2022. Effectively, he spent 15 months explaining systems that ought to have been fixed before he took over – with the regulator choosing to act only after a high-profile founder-MD (managing director) had stepped down.
Atanu Chakraborty’s Allegations: Chairman Atanu Chakraborty’s resignation in March 2026, citing vague ‘happenings and practices… not in congruence’ with his personal values, perhaps caused the most lasting damage, even though he offered nothing specific and had formally raised no issue with the board. The market reaction was brutal: the episode wiped out roughly US$21bn of stock value. The Bank, to its credit, commissioned two independent reviews (from Wilson Sonsini Goodrich & Rosati and Wadia Ghandy & Co), both of which found no evidence to substantiate the outgoing chairman’s allegations. Mr Chakraborty’s conduct smacked of institutional irresponsibility; yet, it was Mr Jagdishan who paid the price, especially as this landed on top of other issues to cause cumulative damage.
The Lilavati Affair: One episode that best captures the disproportionate pressure Mr Jagdishan faced was the Lilavati Kirtilal Mehta Medical Trust affair. The Bank was clear that this was fundamentally a loan-recovery dispute and defended itself vigorously in court. But the personal allegations against him, the resulting criminal case and the repeated recusal of high court judges kept the matter hanging over him, unresolved, for well over a year. The Bombay High Court finally quashed the first information report (FIR) in May 2026, calling it a ‘counterblast’ to the Bank’s recovery proceedings and an abuse of process. A later bench imposed costs on the Trust for a related attempt to gag the Bank. It is hard to believe that this had no impact on Mr Jagdishan personally.
Badly Timed: Two further matters, which may not have been career-defining at a different moment, came at the worst possible time. The first: Maharashtra State Road Development Corporation (MSRDC), a government undertaking, allegedly received roughly ₹45 crore over two years from the Bank, disguised as marketing expenses, in a manner seen as circumventing permitted deposit-rate ceilings. Mr Jagdishan and two others were fined ₹1 lakh each after an internal review that characterised the conduct as business over-reach rather than misconduct. RBI has, since, sought an explanation for what it saw as a mere slap on the wrist.
The second was mis-selling of Credit Suisse AT1 bonds as safe, fixed-return instruments to non-resident clients had swift repercussions, with Dubai’s regulator barring the Bank from on-boarding new clients there. This happened squarely under Mr Jagdishan’s watch and three managers were sacked, once the matter surfaced – a rare instance of the Bank's own leadership making those responsible accountable rather than absorbing blame for someone else’s failure.
Warranted Exit?
RBI’s post-facto, opaque approach to bank CEO reappointment is not new and it is worth asking whether any MD and CEO could have weathered these storms and still been cleared for a third term. Perception matters. Investors are invariably focused on stock price and business growth and have little patience for anything else. India’s regulatory structure plays its own role: no advanced economy caps the tenure of a bank CEO at 15 years with mandatory re-approval every three years. Everywhere else, it is the board’s confidence that decides the matter.
RBI’s propensity to withhold approval without a clear explanation has often made reappointment something of a lottery. In mid-2021, it had already cut Vishwavir Ahuja’s board-recommended three-year term at RBL Bank down to one year. That year, on Christmas day, he abruptly went on leave as RBI simultaneously installed its own nominee on RBL’s board, with no explanation offered (see my column: RBL Bank and RBI’s Christmas Bombshell Needs Clarity). In 2023-24, when Bandhan Bank’s board approved three more years for Chandra Shekhar Ghosh, RBI did not clear it. And, in 2023 and again in 2025, it twice cut short Sumant Kathpalia’s board-recommended three-year term at IndusInd Bank; he resigned weeks after the second cut, in April 2025, after a derivatives-accounting discrepancy came to light.
Mr Jagdishan’s decision to step back is widely seen as a way of avoiding the scrutiny and public humiliation that this kind of process invites. Sceptics would counter: an MD under whom a chairman resigned, a state-corporation deposit deal drew an embarrassing personal fine, and a Dubai franchise mis-sold complex instruments to NRIs (non-resident Indians) was, on any reading, insufficiently in command.
Add to this the fact that HDFC Bank’s stock delivered terrible return during his tenure against very strong gains at ICICI Bank (3x change in share price since December 2020, not counting dividends), and investors are hard-pressed to give him much credit for delivering a historic merger in very trying circumstances.
Perhaps Sashi Jagdishan was simply a decent, process-bound banker in a system that hands its unfinished business to whoever is polite enough to pick it up – and then holds him responsible. His successor may start with fewer big legacy problems. Whether that turns out to be a gift, or simply next decade’s excuse, remains to be seen.
The happenings at HDFC Bank have shaken the confidence of Depositors. We feel inclined to take back our deposits at the earliest. I wonder why there is no comment by the founder of the Bank, Mr Deepak Parekh!
Mr. Sashidhar Jagdishan may indeed have been treated unfairly in some specific controversies, particularly where allegations were unsubstantiated or events clearly predated his tenure, however, that does not establish that he has nothing to do with them. A CEO inherits not only assets but also risks, controls and organizational culture; Six years is long enough time to be judged on how effectively those "inherited" problems were fixed. The Merger's balance-sheet consequences, Persistent operational / control issues, Recurring IT issues, Product mis-selling, Regulatory controversies and Weak shareholder return collectively provide legitimate grounds for questioning effectiveness of Mr. Jagdishan as a CEO even without establishing personal misconduct. The article spends considerable effort proving that Mr. Jagdishan was not personally guilty, but considerably less effort proving that he was an outstanding CEO. Those are two very different propositions.
If SJ felt that there were legacy issues, it was his fiduciary duty as a Board member to raise it up to protect shareholders ! If was being overruled then he should have blown the whistle to SEBI n RBI, bcoz its his duty n moral obligation to do so ! Yet to chose to be silent and tried to cover it up ! What about the shareholders whose investments have tanked over the years and lost billions cumulatively?? Any kind words left for shareholders ? Who trusted the HDFC Bank Leadership to do the right thing but were obviously cheated and betrayed ??
Author is unusually kind to SJ, even though the result of the merger is a major disaster for the Bank. The Bank never recovered from it till now ! Tall claims were being made at the time of the merger about the benefits to the shareholders by Bank Leadership including SJ ! Obviously, HDFC Ltd had hidden the Assets Liability mismatches were then passed onto the Bank in guise of a merger without proper risk assessment or warning to its shareholders! Both Chairman n CEO have now washed their hands off it without taking any responsibility and resigned now ! A small price for taking the shareholders for a fake ride ! The merger, its due-diligence needs to be investigated properly to uncover why the issues were brushed under the carpet by HDFC Bank leadership!
I think it is a more generous view on SJ and HDFC Bank. All the points made have always been known to any management person inside the Bank including merger problems (you got assets also along with the liabilities), Dubai branch problems (mis-selling has always been HDFC Bank's forte), giving extra to Maharashtra department for getting deposits (one cannot give any extra marketing expenses unless it is approved by the CEO himself) , etc. etc. HDFC Bank has become a very arrogant and "who cares for customers" kind of attitude. You please visit a Branch and you will realize how inefficient and bureaucratic they have come over the years. There was an overhaul required at the Bank, the sooner it happened, better it was.
Absolutely, the arrogance and lack of service to customers (remaining loyal for decades) is clearly evident in any interaction with Groups Heads and Senior Operating Management of HDFC Bank. The lip service is Customer First coming straight from the Mr. Jagdishan, however the actual practices of the Bank are completely opposite.
The termination of employees related to UAE bonds, happened only after Atanu came out with his comments. Till that time the good CEO didn't do anything.
Renewal of his contract and remuneration were not done in the proper way according to Mr Atanu.
But yes, nothing like Chanda Kochar or Rana Kapoor.
What is the big deal he is going after two terms. Let new people come and steer the bank back to its heydays.
Why are you saying that during the merger yhe assets came to HDFC Bank but the liabilities did not. Both the Assets and Liabilties would have been merged, isn’t it?
While the fact remains that Puri had done a great job of scaling the bank to dizzying heights it is also a distrubing fact that he deliberately chose not to initiate a succession plan. There were many deserving men with exceptional strengths who could have been handed over the baton ( Paresh Sukhtankar being the most deserving) but he chose the docile SJ who has so far been more faithful to his former boss for hiding the skeletons in the closet. So the blame squarely is on AP rather than anybody else.
The narrative that HDFC Bank outgrew its parent organization, shifting the power dynamic away from Deepak Parekh and toward Aditya Puri, is compelling. While Puri was celebrated as a visionary, his tenure arguably masked a despotic management style aimed at eliminating potential successors who threatened his position. His decision to liquidate his entire stock portfolio upon departure further suggests a lack of long-term confidence in the legacy he built. Given the current institutional fatigue, the bank should now consider a leadership reset, perhaps by bringing back Paresh Sukhtankar to restore the bank's original focus and integrity.
Good riddance to bad rubbish! Spare a thought for the unsuspecting investors who lost their life savings in the Credit Swiss AT1 bonds.Karma has caught up Sashidharan ! Sacking 3 rogue bankers at HDFC Dubai and passing off the false onboarding and manipulation ( read Fraud) and then terming it “ technical gaps”won’t do. Redeem yourself by paying back the life savings of elderly NRIs who were taken for a ride.
Alas, Jagadeesan became the fall guy, as you have correctly called out. He was dealt a lousy hand but tried to make the most of it. He was indeed a decent, old fashioned banker who got dumped with problems that he didn't create. Hopefully, history will judge him less harshly. Go well Mr. Jagdishan.
Perfect insights as always ! When you set tight Governance in a Large Bank like HDFC, the employees too take cover in Bureaucratic Process making them slow & uncompetitive in a digital era ! They need to get to be nimble and swift to get back to even a 10% Revenue and Profit growth consistently. The present Valuation with a New Boss is in line with what they can deliver in the future...
Kudos for your incisive analysis , persuasive logic and rare neutrality. You have the courage to call a spade a spade regardless of its affiliations and position of power and also do not pursue a set agenda. This is excellence in journalism. Keep the flag flying.
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Renewal of his contract and remuneration were not done in the proper way according to Mr Atanu.
But yes, nothing like Chanda Kochar or Rana Kapoor.
What is the big deal he is going after two terms. Let new people come and steer the bank back to its heydays.