The board of HDFC Bank has appointed Rajiv Kumar, a former Finance Secretary, as its new chairman. This decision was made on Monday and reflects Kumar’s extensive experience in the financial sector, particularly in revitalising public sector banking. The bank announced in a regulatory filing that Kumar would serve as an Independent Director for a term of four years, commencing from June 30, 2026.

In addition to this role, the board has provisionally agreed to appoint Kumar as a Part-time Chairman for a period of three years, subject to approval from the Reserve Bank of India (RBI). His tenure as chairman will begin on the date approved by the RBI. Kumar’s experience includes serving as the 25th Chief Election Commissioner of India, where he oversaw a general election involving the largest number of voters globally, establishing a world record.

Kumar’s appointment comes following the unexpected resignation of Atanu Chakraborty, who stepped down in March due to ethical concerns. This transition in leadership is hoped to bring stability and direction to the bank amid ongoing challenges in the financial sector.

Kumar’s Experience and Contributions

Rajiv Kumar has a notable history of addressing issues within the banking sector. As Secretary of the Department of Financial Services from 2017 to 2020, he tackled significant challenges such as high levels of unrecognised non-performing assets (NPAs) and governance issues within public sector banks. His approach involved the provision of decisive policy direction aimed at improving financial stability and operational efficiency.

Shortly after joining the department, Kumar’s administration led to the freezing of approximately 3.38 lakh shell company accounts, addressing the issue of unaccounted money. He played a pivotal role in enacting the Banning of Unregulated Deposit Schemes Act in 2019 to combat fraudulent financial practices. His tenure is credited with initiating a comprehensive clean-up of bank balance sheets, which included the transparent recognition and provisioning of NPAs.

Under Kumar’s leadership, significant reforms were implemented, addressing the longstanding issue of the twin balance sheet problem, where corporate and banking sector debts were interconnected. His strategy focused on recognition, resolution, recapitalisation, and reforms, leading to a turnaround in the fortunes of public sector banks, with improved asset quality and a return to profitability.

Impact on Banking Sector Policies and Strengthening Measures

Kumar’s era witnessed marked improvements in regulatory oversight and accountability in high-profile default cases. Among the measures implemented were the mandatory collection of passport details for loans exceeding Rs 50 crore, which was aimed at preventing large borrowers from evading repayment. Enhanced fraud checks and a robust risk assessment framework replaced previously lax controls, establishing a firmer lending environment.

One of the critical aspects of his policies was the unprecedented recapitalisation of public sector banks, which involved a capital infusion exceeding Rs 3 lakh crore. This initiative restored solvency and increased lending capacity across the sector. Additionally, his role was integral in a consolidation exercise that merged 27 public sector banks into 12 stronger entities, resulting in improved operational efficiency and competitiveness.

Kumar’s focus also extended to enhancing depositor protection by increasing deposit insurance coverage from Rs 1 lakh to Rs 5 lakh. His balanced approach aimed not only at repairing balance sheets but also at promoting growth-oriented initiatives within the financial sector, fostering a more inclusive economy.

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