As HDFC Bank prepares to onboard a new leader, data from the past eight years shows that the Reserve Bank of India (RBI) has taken anywhere from a little over a month to 14 months to approve the appointment of chief executives of private banks.
An analysis by Jefferies looked at the time taken between a bank’s board decision on an appointment and the RBI’s final approval. The fastest was that of Rajiv Anand, who took over as chief executive officer of IndusInd Bank in August 2025 amid a derivatives accounting turmoil. According to Jefferies, RBI’s approval for Anand came 35 days after the bank’s reported deadline to submit names to the regulator.
On the other hand, the RBI took the longest in the case of Sanjay Agarwal, CEO of AU Small Finance Bank. While the board approved his term on 28 January 2022, the regulator gave its assent 439 days later on 12 April 2023.
India’s largest private lender has to find a replacement for incumbent Sashidhar Jagdishan who decided on 29 August to opt out of a third term. His current term ends on 26 October, which means the board has less than two months to look for someone to lead the ₹10.9 trillion bank. Bank boards typically approve CEO reappointments and seek approval from the RBI about six months in advance.
HDFC Bank shares climbed 2.7% early on but gave up gains to end at ₹709 on the BSE, 1.5% below the previous close.
“With the current CEO set to retire in October, the board's decision will involve a trade-off between the time needed to run a wide search — including external candidates — to zero in on the right successor versus the benefits of bringing in a fresh perspective through an external appointment,” analysts at Bernstein said in a note on Monday.
Positive development
Bernstein said it sees Jagdishan’s decision as a good development for two reasons. First, it removes the more negative, feared scenario of the RBI limiting the next term to just one or two years — an outcome that would have amplified governance-related concerns at the bank.
Second, it provides a convenient, natural opportunity for the incoming chief executive (and chief financial officer) to reset the narrative for the bank, which has, among other things, struggled to set and deliver on clear investor expectations.
A person aware of discussions at the bank said it is possible to find a new CEO within two months. In fact, the bank said in its statement on 29 August that the board decided to fast-track the process for selection and appointment of Jagdishan’s successor well within time. Mint reported on Monday that the bank will soon appoint a search firm to look for Jagdishan’s replacement.
Long-time insider and deputy managing director Kaizad Bharucha is expected to be appointed the interim chief, with his permanent elevation constrained by RBI regulations that limit the tenure of whole-time directors to 15 years. Bharucha joined HDFC Bank’s board in 2014, leaving him only until 2029 to remain a director.
Devang Rajkotia, assistant vice-president at Moody’s Ratings, said Jagdishan’s decision introduces a degree of leadership transition risk as the succession was not previously anticipated.
Orderly succession
Rajkotia, whose LinkedIn profile showed he spent over seven years at HDFC Bank before joining Moody’s in 2024, said that an orderly succession process and continuity in strategy execution will be key to sustaining stakeholder confidence and limiting any negative credit implications.
“While leadership changes at systemically important banks can create uncertainty around strategy execution and risk management, HDFC Bank's strong franchise, deep senior management bench and one of the strongest financial profiles among Moody's-rated banks in India mitigate these risks,” he said.
Mint reported in April how a clutch of India's top private banks will decide by the end of next year who their new chief executives would be, and while the incumbents remain eligible, experts are keen on clarity over the second line of leadership. Of the banks named back then, two — HDFC Bank and Kotak Mahindra Bank — saw CEOs deciding to not give a shot at another term.
Other analysts see the HDFC Bank event as one that gives room for an external appointee to make positive changes at the bank.
“We believe that Mr. Jagdishan not seeking a reappointment removes the tail risk of him getting a truncated tenure by the RBI, which would have just prolonged the uncertainty and would have continued to weigh on the stock price,” said Rikin Shah, equity research analyst at IIFL Capital Services.
Shah said a credible external candidate can provide a clean leadership reset and a longer runway to steer the bank.