InvestorQ : What could be the immediate challenges for the new CEO of HDFC Bank, Sasidhar Jagdishan, when he takes charge in October?
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What could be the immediate challenges for the new CEO of HDFC Bank, Sasidhar Jagdishan, when he takes charge in October?

Answer
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2 months ago


To an extent the business models and processes are largely stabilized and as long as the DNA remains the same, it should be smooth sailing. However, as Jagdishan takes over, there are some immediate challenges to address. Let me enumerate a few of them.

· The first priority will be to regain some of the aura that the bank may have lost in the last few months due to the negative press. This is normal in an era of hyperactive journalism but that needs to be addressed.

· There have been a number of very senior level exits including heads of wealth management, technology and vehicle financing. These are critical positions and need to be filled in with competent people.

· More than losing people, the lack of transparency may have hurt public opinion more. The vehicle financing business has seen some real questions about vehicle loans sanctioned with GPS systems that were never approved by customers.

· Recently, SEBI pulled up HDFC Bank for permitting brokers to give partially funded FDs as margins to the exchange. This was clearly a big risk to the exchange and this happened to India Nivesh, which recently shut its India broking operations.

· HDFC has grown aggressively in the last 3-4 years and doubled its loan book. To an extent, it has benefited from the churn at ICICI Bank and has moved way ahead of ICICI bank in terms of total business

· But this growth also means that the potential of future NPAs may open up, especially once the moratorium on EMIs is withdrawn. That could hurt the gross NPA ratio of HDFC Bank, which has long been its strong point.

Jagdishan takes over with a strong background in process, systems and risk management. His skills are likely to get really tested in the months ahead.