Private bank CEO exits put board-management relationship under lens

Differences between boards and management over priorities and strategy are prompting some private bank CEOs to opt out, raising concerns over leadership continuity

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.

 

On Saturday, HDFC Bank informed that its Managing Director & Chief Executive Officer (MD & CEO) 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.

 

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. This could also lead to greater movement of talent across industries,” Mishra added.

 

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. 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. In fact, constructive disagreement between a strong board and management is considered essential for sound governance,” said Vivek Iyer, partner, financial services at Grant Thornton Bharat.

 

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.”

 

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. 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,” said a financial services expert. 

Leadership equation

 

• CEO decisions: HDFC Bank, Kotak Mahindra Bank and South Indian Bank chiefs not seeking reappointment
• Shorter tenure: ICICI Bank’s Sandeep Bakhshi gets a 2-year reappointment, against the usual 3-year tenure
• Governance: Board competence and oversight wider concerns
• Succession: Unresolved CEO appointments can create uncertainty for management, shareholders and investors
• Talent pipeline: Private-sector banks face a shortage of seasoned candidates for CEO positions
• Regulatory framework: Experts call for more predictable CEO appointment and reappointment timelines
• In Long-term: Cost control versus investment in technology, growth and organisational change remains a concern
• Leadership support: Lack of incentives and board backing for long-term transformation may prompt capable leaders to walk away