With legal review complete, HDFC Bank may speed up selection process for CEO, chairman positions

The completion of HDFC Bank's three-month legal review on governance concerns— announced late Friday last week—paves the way for the board of the Bank to speed up the process for renewing current managing director and CEO Sashidhar Jagdishan's name for a third term, to lead the bank.

The legal review, carried out by Wilson Sonsini Goodrich & Rosati and Wadia Ghandy, stated that “contemporaneous evidence reviewed was inconsistent” with former part-time chairman Atanu Chakraborty’s statements—that “happenings and practices” were not in congruence with his “personal values and ethics”—as mentioned in his March 18 resignation letter to the bank’s board.

"We believe that clarity on this matter will allay investor concerns. This is a relief for investors and may lay the path for bank to appoint new chairman & renew Mr. Sashi Jagdishan's term as CEO," whose term ends on October 26, 2026, Jefferies India analysts Prakhar Sharma and Vinayak Agarwal, said in a note to clients on June 28.

A banking analyst at another equity research firm said: "The HDFC Bank board does not have an option but to speed up the process. They might opt for a three-year term."

On Monday, the HDFC Bank stock edged up 0.09% at the BSE, after losing ground on profit taking from day's high of ₹805 apiece. HDFC Bank has a P/E of 13x FY27E, a 10-15% discount to rivals ICICI Bank and Kotak Mahindra Bank. ICICI Bank has a P/E of 15x and KMB's P/E of 16x for the same period, according to Jefferies data.

JP Morgan has also maintained its 'overweight' rating on the HDFC Bank stock and said the legal review would help reduce the governance risk premium which has weighed on the bank's valuation since Chakraborty's sudden exit.

The legal review found no evidence after reviewing meeting minutes and agenda papers, conducting interviews, and reviewing additional documents and information, in the two years preceding Chakraborty’s resignation.

Chakraborty, speaking to Fortune India, after the legal review was announced, has questioned the scope and basis for such a legal review, which should never gain precedence over the governing committee of regulated entities like a bank.

No names have been shortlisted yet for the chairman or the CEO, a high-level source, aware of the matters at the bank, said. Interim part-time chairman Keki Mistry is poised to step down on September 18, 2026.