Tuesday, May 24, 2022
outlook business

Why replicating Aditya Puri's iconic leadership could be a tough ask

While HDFC Bank’s culture is one of performance with conservatism, the next couple of years will be defining for India’s most admired bank

Why replicating Aditya Puri's iconic leadership could be a tough ask

As much as the banking business seems lucrative, every few years it goes through a turmoil that takes down a few players. That has been pretty much the case across the world. Despite a fairly high level of regulatory scrutiny, it’s prone to frauds. But, even if you keep that aside, lending has proved to be a messy business. 

The Indian banking sector has had its own share of woes, and for a good part of this decade it has been in the dumps with asset quality problems that has spared no player, be it in the private or public sector. Except a couple – HDFC Bank and Kotak Bank, who have managed to grow, while maintaining a clean book. Kotak has managed to do so by largely steering clear of the risky credit business. That leaves only HDFC Bank, which has truly created a large credit business, grown consistently every year, and remained nearly unaffected by any kind of economic upheaval over its 26-year history.

This achievement is a clear reflection of the bank’s leadership. But iconic leaders are often difficult to replace and history tells us that leadership transitions are often tough no matter how well they may have been planned. The problem for the new leader often is not only that the benchmark is set high but also that setting the direction for the next phase of growth may need time amid disruption. A risk factor that is already playing out with the RBI pulling the bank up for lapses in its digital business. 

While analysts still expect HDFC Bank to continue its stellar performance, scaling up and maintaining quality growth will not be easy. So far, HDFC Bank has steadfastedly avoided sectors and entrepreneurs that landed other banks in trouble. But can it continue to do so in the future is one key question. 

Amid this transition, the exodus of top-level executives and stake sale by outgoing CEO Aditya Puri, too, seems discomforting, but the market has hardly been swayed by these factors as the rest of the banks continue to disappoint. Analysts right now are simply extrapolating the past and expecting the glorious story to continue. 

While HDFC Bank has certainly not been a one-man show, and the culture is one of performance with conservatism, the next couple of years will be defining for India’s most admired bank.

Advertisement
Advertisement
Advertisement