HDFC Bank managing director and CEO Anup Bagchi starts a three-year term Tuesday as slower growth in low-cost deposits and a continuing leadership handover test the lender’s margins and public confidence.
The Reserve Bank of India approved Bagchi’s appointment on Oct. 1, for a term running through Oct. 26, 2029. Shareholders still must approve it, with e-voting closing Nov. 6 at 6:30 a.m. ET (11:30 UTC; 5 p.m. IST).
Deputy Managing Director Kaizad Bharucha has asked to end his service at the close of business Dec. 31. The board accepted the request and forwarded it to the central bank for approval. HDFC Bank said Bharucha had spent more than 30 years at the lender and helped shape its credit framework.
Governance questions also await Bagchi. Former part-time chairman Atanu Chakraborty wrote in his resignation letter that the bank’s practices were “not in congruence with my personal Values and Ethics.” External law firms later said that assessment was “not substantiated by the record and witness interviews.” The firms also said Chakraborty did not take part in an interview for their review.
Bloomberg reported, citing people familiar with an internal probe, that two senior executives disclosed confidential business strategies and potentially market-sensitive information. HDFC Bank told Bloomberg that an internal review was underway.
The bank’s September-quarter results showed net profit up 4.7% year over year to ₹195.1 billion and net interest income up 9.7% to ₹346.2 billion. Net interest margin was 3.16% of total assets, down from 3.26% in the June quarter. The figures were subject to a limited review.
Deposits rose 18.8% year over year, but time deposits grew 22.8%, compared with 10.8% growth in current and savings account (CASA) deposits. CASA made up 31.6% of deposits at Sept. 30, down from 33.9% a year earlier. HDFC Bank’s annual report warns that greater reliance on higher-cost term deposits can squeeze net interest margins.
Retail loans grew 11.7%, while advances under management rose 15.3% and small and mid-market enterprise loans increased 23.5%. The merger with Housing Development Finance Corporation Ltd. took effect July 1, 2023. HDFC Bank has said integrating the businesses can absorb management capacity and draw attention from other priorities.
Nirav Shah, managing director and CEO of Equirus Capital, told Mint that public perception also matters. “Sometimes it is also about non-financial metrics like how people perceive you as a bank,” he said.
