Sashidhar Jagdishan's exit from HDFC Bank brings to an end a tenure marked by regulatory scrutiny, governance allegations and severe market underperformance, even as the bank’s loans and deposits grew smartly. On Saturday, Jagdishan decided not to seek a third term as the head of India's largest private bank, bringing to an end his three-decade career when his term ends on 26 October. The move could revive investor confidence in HDFC Bank, banking industry observers said.
Jagdishan took over as chief executive officer and managing director in October 2020, succeeding Aditya Puri. While his first term was marked by the landmark merger with HDFC Ltd, the second term saw a slate of negative news, including alleged mis-selling of AT-1 bonds, preferential deposit pricing for a government company, and the abrupt exit of its chairman.
“It's in the interest of the organization. If an individual is impacting the stability of the organization, it's noble of the individual to step aside for the organization,” said Abizer Diwanji, Founder – NeoStrat Advisors LLP, adding that the only issue will be appointing an interim CEO. “It was a much bigger issue, and the bank's valuation was getting impacted because of the sentiment. So, it's a fair strategy to protect the brand. It is inherently a good organisation,” Diwanji said.
“Some noise will settle because there was uncertainty regarding his continuity,” said Siddharth Goel, Director – APAC Financial institutions, Fitch Ratings. "From an investor’s point of view, they might see that something fresh is now there because valuations have come down. With a new CEO coming in, along with the recently appointed chairman, the group can now pursue a more stable strategy for future growth rather than thinking about management concerns. That way the execution burden can ease," Goel added.
During Jagdishan's tenure, shares of HDFC Bank gained 27.7%, against 266.67% at rival ICICI Bank, even as its loan book tripled to ₹30.6 trillion and deposits expanded 2.6 times to ₹31.7 trillion. Valuation weakened – the price-to-book value fell from 3.2 times when Jagdishan took over in 2020, to 1.8 times now. In comparison, ICICI Bank’s valuation improved from 1.8 to 2.7 times over this period. On Friday, the stock ended at ₹720.30, up 1.31% from the previous close. Shares of HDFC Bank have fallen 27.9% in 2026, against a 3.5% decline in the Bank Nifty, marking its worst relative underperformance since 2003.
“The stock has already seen some correction and possibly could see some more negative reaction initially,” said Anand Dama, head of banking and financial services research at Nuvama Institutional Equities, adding that the stock movement will depend on whether the bank goes for an internal candidate or finds a new candidate, which could take 5-6 months leading to “prolonged uncertainty”.
Investors want to know not only whether specific issues have been resolved, but also what has fundamentally changed to reduce the likelihood of recurrence, proxy advisory firm Institutional Investor Advisory Services (IiAS) said in a note, said, adding the coming months will be “defining” for HDFC Bank.
“As the bank engages with the RBI on CEO succession, executive director appointments, and the induction of new independent directors, investors will see these choices as a test of the board’s commitment to governance and long term value,” the firm said, adding that investors will expect the new leadership to show that lessons have been learned from recent missteps, to strengthen culture and processes, and to demonstrate ownership in rebuilding a resilient governance framework.
Two days before Jagdishan's exit news, Macquarie Capital wrote to investors that in case he is reappointed for a short period, uncertainty around the bank “will linger” through the period, and the stock price could fall further during the CEO search.
“If the Reserve Bank of India (RBI) were to give him a term anywhere less than five years, that would have impacted the bank negatively anyway. So, this is more about Sashidhar wanting to step down because of the view that the recent noise has been more targeted at him as an individual,” Diwanji said.
The last year has seen a spate of bad news for HDFC Bank. In September 2025, the Dubai Financial Services Authority (DFSA) barred HDFC Bank's Dubai branch from onboarding new customers citing compliance lapses, onboarding and servicing of clients without proper registration, and alleged mis-selling of high-risk AT-1 bonds issued by Credit Suisse. The bank's chairman Atanu Chakraborty resigned in March, saying that "certain happenings and practices" at the bank were inconsistent with his personal values and ethics.
This was followed by reports regarding preferential deposit pricing for the Maharashtra State Road Development Corp., which led to a nominal penalty on its top executives, including Jagdishan, as well as a federal securities class action lawsuit in the US. On 24 August, Mint reported allegations by NRI investors who said that the bank mis-sold them a life settlement fund by Carlisle.
Driven by a passion for news and commitment to accurate and ethical reporting, Anshika Kayastha has been covering the full spectrum of BFSI—from banks and NBFCs to fintechs, insurance, payments, regulators, personal finance and money markets for the past 13 years. <br><br>Based in Mumbai, her work at Mint spans comprehensive and insightful stories on sectoral trends, regulatory and policy shifts, corporate strategies, governance, and innovation. With a particular interest in fintech, she keeps a close watch on emerging players, disruptive business models, and the evolving regulatory landscape. <br><br>Prior to joining Mint in July 2024, Anshika honed her craft at The Hindu BusinessLine and Informist Media, to deliver incisive, well-sourced reporting on the forces shaping India's financial services. She holds a degree in media and communication from Symbiosis University. <br><br>When she's not tracking the latest RBI circular or tenaciously pursuing the next story, Anshika is most at home in the mountains of Himachal Pradesh. Warm, social, and endlessly curious, she's a self-confessed credit card enthusiast, and brings that same energy to offbeat TV series, puzzles, beach vacations, and competitive game nights.
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