Rajiv Kumar's biggest task: Restoring investor confidence in HDFC Bank

HDFC Bank is banking on former Finance Secretary Rajiv Kumar's appointment as chairman to restore investor confidence after Atanu Chakraborty's sudden resignation

HDFC Bank’s shares tumbled 5 per cent since the sudden resignation of its part-time chairman Atanu Chakraborty on March 18. The bank has underperformed the broader indices, with the Nifty 50 up 4.7 per cent since then. 

Shares of two other large private bank — ICICI Bank and Axis Bank — gained 9.5 per cent and 7.1 per cent respectively during the period. 

The sudden exit of Chakraborty, while stating, “Certain happenings and practices within the bank were not in congruence with his personal values and ethics,” created doubts in the minds of investors and affected the bank’s share movement. 

The doubt lingered, despite the Reserve Bank of India (RBI) clarifying that there was no material concerns on record as regards its conduct or governance of this Domestic Systemically Important Bank (D-SIB). 

In a bid to restore investor confidence, HDFC Bank appointed former bureaucrat Rajiv Kumar, who played a key role in cleaning up public sector banks’ (PSB) balance sheet last decade. Kumar is appointed as part-time chairman for three years, subject to RBI approval. The board of HDFC Bank decided to appoint Kumar as the bank’s part-time chairman for a period of three years earlier this week, subject to RBI approval. 

Kumar who was a secretary in the finance ministry’s financial services department and also became finance secretary, was chief election commissioner of the country between May 2022 and February 2025. The last general elections in 2024 were held under his watch. It is not unusual for commercial banks to bank on former IAS officers or RBI deputy governors to steer past difficult times. 

In 2018, when ICICI Bank was firefighting allegations of impropriety against then managing director (MD) and chief executive officer (CEO) Chanda Kochhar, who later resigned, it appointed former IAS officer GC Chaturvedi to reclaim public confidence. 

Similarly, former RBI deputy governor R Gandhi was appointed Yes Bank’s chairman in 2022 when the bank was being reconstructed after it plunged into a crisis when a moratorium was imposed. 

“Veteran reformer’s appointment as chairman shores up confidence,” a Macquarie note on HDFC Bank, authored by Suresh Ganapathy and Dev Shah, said. 

“Kumar brings extensive policy, regulatory and financial-sector reform experience as an ex-IAS officer, having served as finance secretary of India in 2020 and, earlier, as secretary, Department of Financial Services, during 2017–2020, a period marked by significant stress in India’s banking system,” the note said. Banking sector non-performing assets (NPAs) started to pile up since the asset quality review of the RBI, initiated in 2015-16, peaked in March 2018 after hitting 11.8 per cent. 

Commercial banks’ bad loans have been falling since then, with gross NPA at 1.4 per cent in March 2026. 

Along with the bank clean-up exercise, Kumar oversaw the state-run banks’ recapitalisation programme aimed at strengthening their balance sheets and revive credit growth. 

Then he led the long-awaited consolidation of PSBs, merging 13 banks into five stronger institutions to improve efficiency and scale. 

“HDFC Bank has strengthened its leadership by appointing former finance secretary Rajiv Kumar as chairman-designate,” Kotak Securities said in a note. “His appointment brings extensive policy, governance and public-sector experience to the board, strengthening its oversight and regulatory engagement capabilities,” it added. 

Kumar will join at a time when the bank’s board will take a call on MD & CEO Sashidhar Jagdishan’s extension. 

Jagdishan’s current term ends in October, and the board is yet to take a call because it was awaiting legal firms’ views, which were commissioned to look into Chakraborty’s allegations. 

Now, the legal firms have given a clean chit to the bank and its board, and the issue of CEO extension may be taken up soon.Clarity on the CEO’s reappointment is expected in a few days, and Kumar will have a key role to play on the issue. 

HDFC Bank shares ended at  ₹801.00 on Friday, up 0.6 per cent from its previous close.