Bandhan Bank on the Hunt for Ghosh's Successor

Bandhan Bank, headquartered in Kolkata, is contemplating the appointment of an outsider as the successor to its Managing Director and Chief Executive Officer (MD and CEO), Chandra Shekhar Ghosh, who recently announced his unexpected retirement, effective July 9.

Moneycontrol reported on April 19 that the bank had engaged Egon Zehnder, a headhunting firm, to find candidates for the CEO position. Egon Zehnder is currently evaluating potential candidates and is expected to present a short list to the bank's board in the coming weeks.

External candidates are being considered for the agency's board due to a lack of experienced internal candidates. Bandhan Bank has two executive directors: Rajinder Babbar and Ratan Kesh. Babbar has only been on the board for two months, while Kesh has just over a year of experience. The Reserve Bank of India prefers to appoint a candidate with more board experience. 

Bandhan Bank made an unexpected announcement on April 5, revealing that Ghosh would step down as CEO on July 9 after completing his current term. The announcement caught many by surprise, as Ghosh's re-appointment for three years had been approved by the bank's board in November 2023. However, the Reserve Bank of India (RBI) did not grant its approval for the re-appointment.

Ghosh asserted that his resignation from executive roles was voluntary, and the bank had commenced the search for a successor as 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.

Amidst speculation that the RBI has declined to extend Ghosh's tenure as CEO and MD, he made these remarks. “There is no communication from the RBI on this,” Ghosh told Moneycontrol.

Post-retirement, Ghosh will assume a 'strategic role' within the group holding company, providing guidance to the group's various business units. Bandhan Bank's parent company, Bandhan Financial Holdings Ltd., operates subsidiaries in insurance and mutual funds. The holding company holds approximately 40% ownership in Bandhan Bank.

Ghosh, the founder of the bank, has been a staunch advocate for financial inclusion in India. He possesses over three decades of expertise in the field of microfinance and development.

“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, i.e. on July 9,” Ghosh said in his resignation letter attached to the regulatory filing.

“Notwithstanding the challenges, in almost nine years, Bandhan Bank has garnered ₹1.35 lakh crore as deposits and advances stood at ₹1.28 lakh crore as of March 31, 2024. Year-on-year growth has been impressive,” he said.

Ghosh's successor faces numerous challenges, including an ongoing audit by the National Credit Guarantee Trust Company (NCGTC) of its claims under the Credit Guarantee Fund for Micro Units (CGFMU) in the microloan portfolio. The NCGTC is scrutinizing a loan portfolio exceeding ₹20,000 crore to investigate suspected cases of loan ever-greening.

Ghosh's successor must regain investor confidence, as asset quality concerns and corporate practice worries have eroded it in the past, leading to a 25% decline in the bank's stock price over the last year. Ghosh's successor must convince investors that the bank's worst days are behind it.