The Reserve Bank of India (RBI) on Thursday approved the appointment of ICICI Group veteran Anup Bagchi as the chief executive of India’s largest private lender, HDFC Bank, for a three-year term from 27 October.
Bagchi, 56, was widely seen as the top contender for the post, alongside internal candidate Kaizad M Bharucha. For Bagchi, the appointment marks a return to banking after three years in insurance. This also helps retain ICICI Bank’s tag as the chief executive factory, having produced several top leaders scattered across financial services.
The appointment is also the second instance in recent years of an insurance executive being brought in to lead a bank. In 2019, Amitabh Chaudhry joined Axis Bank as chief executive from HDFC Life Insurance Company.
The vacancy at HDFC Bank arose from incumbent chief executive Sashidhar Jagdishan’s decision not to seek a third term. Having joined the bank in February 1996, Jagdishan rose through the ranks to become chief financial officer in 2008 and then chief executive in 2020, after Aditya Puri stepped down.
The central bank’s decision also ends speculation over who will lead the $119-billion private lender, which has been mired in multiple controversies in recent months. This included the sudden and dramatic departure of then-chairman Atanu Chakraborty, and allegations surrounding the bank’s preferential treatment of a particular bulk depositor.
Bagchi’s former colleagues describe him as an intelligent executive who can work the room and can get things moving quickly. While at ICICI Bank, Bagchi was credited with creating a product that gave risk assessment teams a better grip over customer cash flow. Under him, the bank launched lending to small businesses based on their goods and services tax (GST) returns in 2018.
“Earlier, it was extremely difficult to assess cash flows of small businesses who would tell us that beyond what was reported in the tax filings, there was income in cash,” said a former colleague of Bagchi.
He said the bank has, at times, sent staff to wait outside establishments to ascertain the volume of sales and customer footfall and find out whether it does the kind of business it claims to do. “That changed with GST and therefore the bank’s product was timely,” said the colleague.
A chemical engineer from IIT Kanpur with a management degree from IIM Bangalore, Bagchi joined the ICICI Group in 1992 and has worked across wholesale banking, transaction banking, retail banking, treasury, investment banking, and payment and settlement systems over the course of his career.
He led ICICI Securities from May 2011 to October 2016. His elevation from an executive director to CEO at ICICI Securities came in 2011 after Madhabi Puri Buch — who later became the chair of Securities and Exchange Board of India (– moved to another group entity. Bagchi returned to the bank as an executive director in February 2017.
Apart from sensing business opportunities, Bagchi also has a history of working on key regulatory committees. He was a member of RBI’s committee on small businesses in 2019 and of a Sebi committee on financial and regulatory technologies in 2017, among others.
What analysts say
“The good part is that since Bagchi is young, he can easily serve for a long tenure say nine, 12 years, and hence can come with a long-term view and vision to change the bank of course subjected to the board and RBI approvals,” Suresh Ganapathy, managing director, Macquarie Capital said in an email to clients on 22 September.
Under RBI regulations, private bank chiefs can be at the helm for up to 15 years or till they turn 70.
However, Ganapathy cautioned that an external candidate who gets appointed will have to deal with senior management exits, and the top priority for the new external CEO is to stabilize the senior management and control attrition levels.
He said that the priority of the new chief executive will be to drive up the retail growth, particularly on the retail unsecured side, and focus more on CASA (current and savings account. He also has to enhance the tech architecture and make the bank more tech-savvy; improve service culture as we believe there is a gap here, said Ganapathy.
HDFC Bank has a lot of catching up to do, giving Bagchi ample room to make his mark. Rival ICICI Bank has narrowed the gap in market capitalization as India’s largest private lender saw its shares fall 25.7% since the beginning of the year. In comparison, ICICI Bank is down 0.8% in the same period. Once the darling of the markets, HDFC Bank commands a market cap of ₹11.3 trillion, compared with ₹9.5 trillion for ICICI Bank.
Experts see stability returning to HDFC Bank, once known for consistent performance under Puri.
“HDFC as an organization has always been focussed on sustainable growth. That institutional DNA matches with Anup because he brings the same kind of principles as a professional,” said Vivek Iyer, partner and financial services risk leader at Grant Thornton Bharat.
Iyer said large institutions need continuity of leadership and the greater the alignment of the leadership with that of the organisation, the greater is the continuity.
“With all this in mind, Anup’s leadership will genuinely bring about continued sustainable growth for HDFC Bank,” he said.
That said, Bagchi is unlikely to walk into a room full of warm and welcoming senior executives and as many in the industry believe, could be wearing a crown of thorns. However, Iyer believes that given Bagchi’s past record of managing people, he can find a way out.
“As a financial services professional, Anup has always had a history of having a very balanced conversation which will play a great role in balancing the management and the board expectations. He can work alongside the best talent within the organisation and give them a fresh perspective,” said Iyer.