As HDFC Bank scrambles to find a successor to chief executive officer Sashidhar Jagdishan, the country’s largest private lender confronts a question that might bother its competitors too: do India’s private banks have enough leadership depth to manage a new era of recurring CEO transitions?
Kotak Mahindra Bank is also looking for a new chief, and ICICI Bank faces a CEO transition in two years. Private banks are going through more frequent leadership changes than earlier, when stalwarts including K.V. Kamath, Aditya Puri and Uday Kotak held the reins for decades.
What they have left behind is a private banking landscape marked by high key-person risk, a shallow pool of all-round banking leaders and reliance on familiar candidates. Banks are just underprepared for top-level succession, according to headhunting experts.
Over the past decade, 52% of private-bank CEOs served for five years or less, while almost 60% of public-sector bank chiefs left within three years, Mint’s analysis of annual report data from 27 private and public sector banks from 2017 to 2026 showed. Only a quarter of private sector executives stayed beyond 10 years, with Puri, HDFC Bank’s founding managing director and CEO, recording the longest tenure at 26 years.
Long tenures are no longer the norm even though private-bank CEOs still serve over twice as long as their public sector peers on average. The analysis showed that 59 CEOs and managing directors (chairpersons, in some cases) who left office from 2017 to 2026 had an average tenure of six years and five months at private banks, compared with an average of two years and 10 months at public sector banks.
This pegs the overall average CEO tenure for India’s banking sector at about 4.5 years, slightly shorter than the average five-to-eight-year tenure for global financial services CEOs, according to Sonal Agrawal, managing partner at Accord India.
Where are the captains?
The growing churn underscores a deeper talent shortage in private banking, leaving boards to repeatedly turn to familiar names, said Amit Agarwal, managing director at Stanton Chase Singapore and India. According to him, while private banks have impeccable specialists in retail banking, sales, finance, credit or risk management, they lack executives with well-rounded experience across multiple facets of banking who can take the helm.
“Job rotation is critically important in succession planning for cross-functional leadership experience. In the last 20 years, banks have pretty much stopped this exercise,” Agarwal said. “Not every vice-captain can become a captain.”
Despite being aware of the challenges, private bank boards often build succession plans around the assumption that CEOs will complete long tenures, said K. Sudarshan, regional chair of Asia and managing director of EMA Partners India.
Ironically, longer CEO tenures should give banks more time to identify and groom successors. But that often leaves the next generation of leaders with limited exposure to the top job, while reporting to strong, long-serving CEOs, Sudarshan said. Very long CEO tenures can leave private banks with succession plans on paper but no genuine successors when needed, he added.
One-man show
Boards also often struggle to find successors to “larger-than-life” founders and promoters who remain at the helm for decades, noted Agarwal of Stanton Chase.
This creates a key-person risk, according to Sudarshan, where strong leaders accumulate institutional knowledge, influence and decision-making authority over years, making them harder to replace.
“We have seen that the ideal CEO tenure should not exceed 10 years. Anything beyond that can deeply impact succession planning initiatives,” Sudarshan said.
According to the Reserve Bank of India’s rules, private-bank CEOs can serve for up to 15 years, subject to a 70-year age cap, while promoter or owner CEOs face a 12-year limit. At public-sector banks, the government has capped the maximum tenure at 10 years, split into two five-year terms, with retirement at 60.
Public concerns
However, public sector bankers typically reach the managing director role in their mid-to-late 50s, often after an executive director stint, leaving a shorter runway at the top, said Agrawal of Accord India. The central government and the Financial Services Institutions Bureau, which shortlists candidates for leadership roles in public sector banks, also control appointments, leaving individual bank boards with limited say over choosing or retaining CEOs, while successors are drawn from the broader public sector pool, she added.
The public sector ecosystem is therefore designed for continuity, contributing to shorter CEO tenures and creating a fundamentally different leadership and succession architecture from private banks. These differences may also explain investor concerns over public sector bank chiefs potentially leading HDFC Bank, with Jefferies noting in a recent report that such appointments could complicate the transition.
Jefferies sees Kaizad Bharucha, HDFC Bank's deputy managing director as the simpler internal choice, with a potential three-year tenure. Other names include Axis Bank chief Amitabh Chaudhry; Anup Bagchi, ICICI Prudential Life's CEO; Vibha Padalkar, heading HDFC Life; and Rajiv Sabharwal, CEO of Tata Capital, according to the report.
Although public-sector veterans have been appointed by private banks in the past, such moves were largely aimed at stabilizing distressed institutions. RBL Bank appointed former Indian Overseas Bank chief R. Subramaniakumar as its chief executive in 2022, while Yes Bank turned to former State Bank of India executives Prashant Kumar and Vinay Muralidhar Tonse during and after its rescue in 2020.
“In HDFC's case, the bank needs someone who understands scale, can put in place tighter controls and, most importantly, revive faith in the market," said Sudarshan of EMA Partners.