Sashidhar Jagdishan will not seek reappointment as chief executive of HDFC Bank when his term expires in about two months. Ashok Vaswani declined an extension at Kotak Mahindra in June; his three-year term runs out on 31 December. At Ujjivan Small Finance Bank, Sanjeev Nautiyal stepped down on 1 September for health reasons, and an executive director is holding the post.
Two of those three were reported as surprises. Only one of them actually was.
A term with an end date is not a surprise
Vaswani's three-year term has had the same expiry since the day he signed it. Jagdishan's term has had a known end date for as long as it has existed. Nothing about either date changed. What changed is that the incumbent declined to extend, and everyone had been assuming the extension.
That assumption is the interesting object. Reappointment at the end of a bank chief executive's term had become the default expectation to such a degree that the stated term stopped functioning as information. The market priced tenure; the board planned for tenure; and the document said three years.
A fixed term that everybody expects to be renewed is not a fixed term. It is an option held by the incumbent and the regulator jointly, and the institution around it has quietly reorganised itself on the assumption that the option will always be exercised.
Which is why nobody has a successor ready
The consequence is visible in the fact that these searches are searches at all.
Succession planning against a stated term is a scheduling exercise. You know the date, you know how long it takes to season an internal candidate for a chief executive role at a large bank — three to five years of running a major division with profit and loss responsibility — and you count backwards. That is not difficult. It is merely unglamorous, and it requires a board to name a likely successor early enough that the person is still there when needed.
Succession planning against expected renewal is not a plan. It is a hope with a calendar attached, and when the hope fails the board begins from a standing start with two months of notice.
Three banks are looking simultaneously, which suggests this is not one board's oversight. It is what happens when an entire sector treats a term limit as a formality.
The regulator's rule is doing its job and only its job
The Reserve Bank of India caps bank chief executive tenure at fifteen years and sets an age limit of seventy. Those rules exist for a specific and sound reason: Indian private banking was built by founders, and a founder who runs a bank for thirty years accumulates an institutional gravity that makes ordinary governance difficult. Forcing turnover breaks that.
It works. It has produced exactly the outcome intended — powerful bank chiefs leave.
What a tenure cap cannot do is produce a replacement. It creates vacancies on a predictable schedule and leaves the bench-building to the boards, which is the correct division of labour and depends entirely on the boards doing their half. A rule that forces turnover in an institution that has not developed successors converts an entrenchment problem into a continuity problem, and the regulator has no instrument for the second one.
That is not an argument against the cap. It is an argument that the cap was always only half of a system.
The specific cost of a standing start
A new chief executive at a large bank spends the first year learning the book — which exposures are real, which businesses are earning their capital, which of the previous strategy's commitments were genuine and which were presentational. Almost nothing strategic happens in that year, and anything that does happen tends to be reversal, because the safest early move is to undo what you did not choose.
At two banks simultaneously, in a competitive market, that is two years of slowed decision-making across a large share of the private sector — not because either new chief executive is weak, but because that is the shape of the job's first eighteen months.
The alternative is an internal successor who already knows the book, which is the cheapest recruiting channel that exists and requires a decision made years before it is needed.
The pattern beyond banking
This desk has spent the week on rules that only became real when somebody enforced them. Kentucky's tax trigger returned an answer the legislature did not want. The H-1B wage level stopped being paperwork the moment the lottery started counting it. FEMA's disaster criteria turned out to be a judgement rather than a threshold.
A chief executive's term is the same category of object: a stated rule that everybody had learned to read as a formality, right up until the day somebody treated it as binding.
What a board should publish
Not a named successor, which is destabilising and often untrue.
The number of internal candidates currently in roles that would qualify them, and how long each has held one. That is a factual disclosure, it does not name anybody, and it is the only external signal of whether a board has been building a bench or assuming an extension.
No Indian private bank publishes it. Neither does anybody else.
The statement by HDFC Bank chief executive Sashidhar Jagdishan that he will not seek reappointment when his term ends in about two months; the decision by Kotak Mahindra Bank managing director and chief executive Ashok Vaswani in June to decline an extension, with his initial three-year term ending on 31 December 2026, and the description of both as surprising analysts; the resignation of Sanjeev Nautiyal as managing director and chief executive of Ujjivan Small Finance Bank on 1 September 2026 on health grounds with executive director Carol Furtado appointed interim head; and the Reserve Bank of India's cap of 15 years on bank chief executive tenure with an age limit of 70 are as reported by Deccan Herald, Telangana Today, Economic Times and Trade Brains in September 2026. The analysis is our own.
Topics leadershipbankingsuccessiongovernance
