Former Bandhan Bank Chief Calls for Extended CEO Tenures to Foster Strategic Vision
Chandra Shekhar Ghosh, the founder and former CEO of Bandhan Bank, has publicly advocated for longer tenures for bank chief executives to facilitate improved long-term planning and institutional growth. In a recent interview, Ghosh, who now serves as the chairman of the Bandhan Group, highlighted the limitations of the current three-year term system for bank MDs and CEOs.
Reflections on Leadership and Regulatory Framework
Ghosh stepped down from his roles as managing director and CEO of Bandhan Bank in July 2024 after nearly a decade at the helm, including three consecutive terms. He pointed out the disparity between the five-year term of parliament and the three-year terms for bank leaders, questioning how effective planning can occur under such short durations. "Even parliament has a five-year term and bank managing directors have three years. So how will one plan?" Ghosh remarked, emphasizing the need for a broader perspective.
The Reserve Bank of India permits bank CEOs to serve up to 15 years or until they reach 70 years of age, with a limit of 12 years for promoter CEOs. Ghosh's tenure aligned with these guidelines, but he believes the three-year renewal cycle hinders long-term vision. Experts, such as Abizer Diwanji of Neostrat Advisors, note that the three-year terms are intended for periodic performance reviews by regulators, not as a cap on planning horizons.
Challenges and Milestones During Ghosh's Tenure
Ghosh cited multiple reasons for his sudden resignation, including regulatory constraints that limited certain pursuits and the bank's migration to Oracle core banking systems in 2023, which he oversaw to ensure a smooth transition. He shared an anecdote from late 2023 when the bank's micro-loan disbursements dropped significantly, prompting immediate action to resolve branch-level issues and restore operations.
Under his leadership, Bandhan Bank faced regulatory challenges related to promoter shareholding dilution requirements. Initially, the bank failed to reduce promoter holdings to 40% by August 2018 as mandated, leading to RBI restrictions on branch expansion and Ghosh's remuneration. After efforts to comply, including secondary market sales that brought holdings down to 40% by August 2020, these curbs were lifted. The next dilution target is set for August 2030, with promoter holdings required to fall to 26%.
The Promoter's Role and Future Vision
Ghosh expressed a sense of missing the "driver's seat" at the bank he founded, underscoring the unique role promoters play in driving growth and innovation from the ground up. "I feel that promoters have the heart of the organization and are not just looking for profit," he stated, aligning his views with regulatory expectations for long-term planning without contradiction.
As chairman of Bandhan Financial Services Ltd, Ghosh now focuses on enhancing financial accessibility, staying true to his roots in microfinance and social work. He is also actively involved in promoting entrepreneurship in West Bengal through the Bengal Business Council, aiming to shift the business mindset towards scaling and innovation beyond generational limits.
The Indian banking sector continues to attract significant foreign investment, with approximately $15 billion flowing into private financial entities in 2025 alone, highlighting the dynamic environment in which leaders like Ghosh operate.
