‘There is mis-alignment in strategic thinking of the board and management.’
‘As the business environment and customer behaviour evolve rapidly, boards are increasingly looking for leaders who can bring new ideas and challenge legacy approaches.’
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Differences between the board and management of private sector banks over priorities and strategy are being cited as one of the reasons several chief executives are choosing not to seek reappointment or are opting for shorter terms, according to experts.
This has raised concerns over leadership continuity and lenders’ ability to pursue long-term transformation.
Key Points
- Private sector banks are witnessing a rise in CEOs choosing not to seek reappointment or opting for shorter tenures, raising concerns over leadership continuity.
- Experts say differences over priorities, strategy and long-term transformation are contributing to some leadership exits.
- HDFC Bank’s Sashidhar Jagdishan, South Indian Bank’s P R Seshadri, Kotak Mahindra Bank’s Ashok Vaswani and ICICI Bank’s Sandeep Bakhshi have all made notable tenure decisions.
- Analysts warn that prolonged CEO appointment processes and weak succession planning could slow transformation and hurt shareholder value.
HDFC Bank CEO Decision
On Saturday, August 29, 2026, HDFC Bank informed that its Managing Director and Chief Executive Officer Sashidhar Jagdishan was not looking to seek a third term after his tenure ends on October 26, 2026.
Earlier this year, South Indian Bank’s MD & CEO P R Seshadri decided not to seek reappointment.
Ashok Vaswani, MD & CEO of Kotak Mahindra Bank, also said he would not seek reappointment after his current term ends on December 31, 2026.
Board And CEO Misalignment
According to experts, while the circumstances differ from one bank to another, the succession question is becoming increasingly important as lenders navigate rapid changes in technology, customer behaviour, risk management and competition.
They said the concern goes beyond the performance of individual CEOs and points to weaknesses in governance and board competence.
“Recent decisions by CEOs not to seek re-appointment in the BFSI sector reflect multiple factors at play, right from individual context to a growing gap between traditional leadership models and boards’ expectations,” Aditya Mishra, MD & CEO, CIEL HR, said.
“There is mis-alignment in strategic thinking of the board and management. As the business environment and customer behaviour evolve rapidly, boards are increasingly looking for leaders who can bring new ideas and challenge legacy approaches,” Mishra explained.
“This could also lead to greater movement of talent across industries,” Mishra added.
RBI Appointment Framework
At ICICI Bank, the second-largest private bank, MD & CEO Sandeep Bakhshi decided to seek a shorter reappointment of two years, compared with the three years that is the normal practice.
The RBI has approved Bakhshi’s reappointment.
“Re-appointment of CEOs is ideally a routine governance process, but when it becomes prolonged and highly public, it can place significant pressure on CEOs, management teams, shareholders and investors,” said Vivek Iyer, partner, financial services at Grant Thornton Bharat.
“Various instances of CEOs not seeking another term are due to different reasons, including regulatory constraints, strategic disagreements or prolonged uncertainty — not necessarily because of fundamental board-management misalignment,” Iyer added.
“In fact, constructive disagreement between a strong board and management is considered essential for sound governance,” Iyer said.
<>He also said the larger concern is the uncertainty created when CEO appointments remain unresolved.
“The RBI should also reconsider the existing CEO appointment and reappointment framework, with greater emphasis on predictable tenures, leadership continuity and timely decisions.
“Also going forward, there is a lack of talent in private-sector banks for seasoned CEO positions and might take nearly seven years for the vacuum to fill.”
Governance Concerns Deepen
The concern is particularly relevant for older private sector banks, where boards may sometimes remain focused on near-term cost control instead of supporting investments required for growth, technology and organisational transformation.
Weak board oversight, excessive concentration in certain businesses and an inability to balance growth with asset quality can leave lenders vulnerable when conditions deteriorate.
“Some of the CEOs in banks are not seeking re-appointment because of difference in alignment of priorities between board and CEO, lack of sufficient incentives and support for long-term transformation rather than difficulties in running the business,” said a financial services expert.
“The implication is that capable leaders may choose to walk away, leaving banks with weaker succession, stalled transformation and, ultimately, destruction of shareholder and stakeholder value,” the financial services expert added.
Feature Presentation: Ashish Narsale/Rediff
