 "Bandhan Bank seeks external candidate for CEO role as Ghosh set to retire")
Kolkata-based Bandhan Bank is considering an external candidate to succeed Managing Director and Chief Executive Officer (MD and CEO) Chandra Shekhar Ghosh, who recently announced his scheduled retirement on July 9.
In April, the bank appointed headhunting firm Egon Zehnder to search for candidates for the CEO position. The firm is currently evaluating potential candidates and is expected to present a shortlist to the bank’s board in the coming weeks.
Sources told Moneycontrol that the agency is looking beyond internal candidates due to a lack of board-level experience. Bandhan Bank’s Executive Directors, Rajinder Babbar and Ratan Kesh, have limited board experience. Babbar has been on the board for only two months, while Kesh has just over a year. The Reserve Bank of India (RBI) is reportedly more inclined to appoint a candidate with more experience.
Chandra Shekhar Ghosh stuns the market
In a surprising move, Bandhan Bank announced on April 5 that Ghosh will step down after his tenure ends on July 9. This decision came as a shock, as the bank’s board had approved his re-appointment for three years in November 2023, but it did not receive the RBI’s approval.
Ghosh has maintained that his decision to step down was voluntary and that the bank had already initiated the search for a new CEO. “Let me make it clear that this is a voluntary decision. I have been thinking of retirement for nearly a year and have taken a call now,” he told Moneycontrol on April 8.
Ghosh’s remarks came amid speculation that the RBI had refused to extend his term. “There is no communication from the RBI on this,” he added.
Also Read
Ghosh’s transition to advisor role
Post-retirement, Ghosh will assume a strategic role at the group holding company level, advising the group’s business verticals. Bandhan Bank operates insurance and mutual fund subsidiaries under Bandhan Financial Holdings Ltd, which holds about 40 per cent of the bank.
Ghosh, who is also the founder of the bank, has been a key advocate for financial inclusion in India. He has over 30 years of experience in microfinance and development terrain.
“After leading the bank for almost a decade, including three consecutive tenures as MD and CEO, I feel that the time has come for me to assume a larger strategic role at the Bandhan Group level. Hence, I have decided to retire from the services of Bandhan Bank at the end of my current tenure as MD and CEO, that is, on July 9,” Ghosh stated in his resignation letter.
“Notwithstanding the challenges, in almost nine years, Bandhan Bank has garnered Rs 1.35 trillion as deposits and advances stood at Rs 1.28 trillion as of March 31, 2024. The year-on-year growth has been impressive,” he said.
Challenges awaiting the new CEO of Bandhan Bank
Ghosh’s successor is expected to face multiple challenges. There is an ongoing audit by the National Credit Guarantee Trust Company (NCGTC) of claims under the Credit Guarantee Fund for Micro Units (CGFMU) in the microloan book. The NCGTC is examining a loan book of over Rs 20,000 crore to identify potential cases of loan evergreening.
“We expect the CGFMU audit to be completed soon. As per the communication, we are expecting a positive response,” Ghosh said during the post-results analyst call on May 17.
Bandhan Bank had insured a portfolio of Rs 20,800 crore under the CGFMU scheme and disbursed over Rs 1,950 crore under the Emergency Credit Line Guarantee Scheme (ECLGS) in FY21. The NCGTC has flagged concerns that the loans were either evergreen or that Bandhan Bank created fictitious accounts to maximise guarantee cover.
The new CEO will also need to restore investor confidence. Concerns about asset quality and certain corporate practices have troubled investors, causing the bank’s stock price to drop by over 25 per cent in the past year. The new CEO also needs to assure investors that the worst is over for the bank.