Anup Bagchi’s big test at HDFC Bank is winning back investor trust
Bagchi, 56, joined the bank’s board as additional director on Friday and will succeed Sashidhar Jagdishan as managing director and CEO on October 27. He has been appointed for a three-year term, subject to shareholder approval.
His immediate challenge is to give investors fewer, clearer measures of progress, according to analysts. HDFC Bank has outlined goals to increase loans faster than the banking system, keep net interest margins stable, reduce its cost-to-income ratio to 30% and lower its loan-to-deposit ratio to 90%.
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Brokerage Bernstein said the range of targets, coupled with unclear timelines, has made it difficult to judge whether performance is improving.
“Consistent delivery against one or two clearly defined metrics would likely do more to rebuild investor confidence than uneven progress across multiple aspirational goals,” said Pranav Gundlapalle, India head-financials at Bernstein. “Bagchi’s appointment checks several boxes for investors. The full term suggests regulatory comfort with the choice, while age gives him time to pursue a longer turnaround. As an external hire, he also has an opportunity to reset internal dynamics and investor expectations.”
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Suresh Ganapathy, managing director at Macquarie, said Bagchi brings experience across retail and wholesale banking at ICICI Bank, as well as the perspective gained from running listed insurer ICICI Prudential Life. His first challenge at HDFC Bank, however, may be to retain senior executives. Ganapathy said he expects an external appointment to lead to some departures, with anecdotal industry feedback pointing to exits among long-serving branch managers.
“The top priority for the new external CEO is to stabilise the senior management and control attrition levels,” said Ganapathy.
Beyond the leadership transition, Macquarie identified five operating priorities: revive retail lending, particularly unsecured credit; arrest the decline in low-cost current and savings account deposits; strengthen technology; improve service and make better use of the bank’s subsidiaries to sell products to existing customers. Bagchi’s task will be to turn those priorities into results investors can track.
