Mumbai: 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, industry experts are keen on clarity over the second line of leadership.
Chief executive officers (CEOs) of five prominent private sector banks —HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and IDFC First Bank—will require regulatory nod for another term. While the board of ICICI Bank has already approved a shorter-than-usual two-year term for CEO Sandeep Bakhshi, HDFC Bank’s Sashidhar Jagdishan is willing to serve another term. And there are no disclosures yet on the reappointment of Ashok Vaswani of Kotak, whose term ends in December 2026.
Bakhshi and Jagdishan's current tenures end in October 2026. For Axis Bank and IDFC First Bank, the CEO tenures will end in December 2027.
Under the Reserve Bank of India (RBI) regulations, private bank chiefs can be at the helm for up to 15 years or till they turn 70. While the current CEOs of these five banks are eligible for renewal, the market is also watching if the lenders groomed second-rung leaders during their tenures.
External candidates
Of late, India’s private lenders have seen bankers from outside their organizations join as chief executives. After billionaire banker Uday Kotak decided to hang up his boots in September 2023, the bank hired Vaswani, a former executive at Barclays.
Federal Bank decided to go with K.V.S. Manian, whose last role was at Kotak Mahindra Bank and was widely seen as a potential successor to Kotak. More recently, Yes Bank hired State Bank of India (SBI) former managing director Vinay Tonse to replace Prashant Kumar, who demitted office in April.
“On paper, there is succession planning by all boards, but in reality we are seeing a lack of second rung who will rise to lead the organization,” said a senior consultant at one of the Big Four firms, requesting not to be named.
The consultant said that the fact that the heads of Federal Bank and Yes Bank were set to retire was known for long, but it was surprising that the boards could not find suitable internal replacements. Private bank boards typically suggest a mix of internal and external names to the RBI for approval before they go to the shareholders. It is the regulator that finally picks a candidate and also decides on the maximum permissible remuneration.
“I feel that the RBI should push the boards to be more proactive in planning succession and monitor it itself. When you are picking the CEOs and even deciding how much they will be paid, why not keep a closer watch on succession,” said the consultant cited earlier.
He added that in many private banks, the second rung is invisible and the CEO is the face, leaving others wondering whether they will ever be prepped for the role.
Spokespersons for HDFC Bank, ICICI Bank, Kotak Mahindra Bank, IDFC First Bank, and Axis Bank did not respond to emailed queries related to the issue.
Challenging ask
Recruiters said the banking sector, given its scale and regulatory intensity in India, tends to prioritize leaders with deep industry experience.
“This has led to a relatively contained talent pool, especially as regulatory expectations continue to tighten,” said Preety Kumar, managing partner at leadership advisory and executive search firm Amrop India.
Kumar said the scope and expectations from C-suite executives have also expanded significantly, spanning transformation, growth, digitization, and global integration—further narrowing the pool of leaders who can effectively deliver at this level.
Experts agreed that banks are finding it harder to get leadership talent. They said the RBI, over a period of time, has been asking regulated entities to have stronger governance practices in place to avoid systemic stability risks. Financial stability has become a key priority, and so the earlier focus of having business heads with front-end experience of banking to lead banks as CEOs is changing.
The CFO edge
“The regulator is now insisting on candidates having prior governance experience in their banking journey. This is also one of the reasons why we are seeing a lot of CFOs (chief finance officers) as well as senior professionals in the banking industry with governance experience being looked at for CEO positions,” said Vivek Iyer, partner and national leader financial services, risk advisory, at Grant Thornton Bharat.
Some instances include HDFC Bank appointing Sashidhar Jagdishan and Yes Bank appointing Prashant Kumar as chief executives in 2020. Both were chief financial officers before they took up the top job. While Kumar was in State Bank of India, Jagdishan rose from within HDFC Bank.
Iyer said CFOs have a strong understanding of business, finance, and governance because of their regular interface with the audit committees.
Some industry experts believe the banking regulator's efforts on the issue are enough and working.
Succession planning remains a critical board agenda, with the regulator nudging banks to build a stronger succession pipeline, said Monica Agrawal, chairperson and country head at Sheffield Haworth India. “They (bank boards) are implementing robust talent development programmes and more job rotations to expose employees to diverse functions and roles.”
Agrawal said senior leaders from the State Bank of India are in demand as they are already exposed to diverse roles and large balance sheets during their long tenures there. Yes Bank, Bandhan Bank, Ujjivan Small Finance Bank and Karur Vysya Bank are all currently headed by former senior officials of SBI.