Anand, came out of retirement from Axis Bank to head the Hinduja Group-backed private sector lender on 25 August. Before Anand’s tenure, IndusInd Bank witnessed its incumbent chief executive Sumant Kathpalia and deputy chief executive Arun Khurana exit unceremoniously and under a cloud of alleged insider trading.
In an interview to MintAnand, whose three-year term was approved by the Reserve Bank of India (RBI) in August, said that his message to the regulator is that he will ensure the bank follows a significantly higher level of compliance. For customers it will be to say that the bank is safe and secure and is therefore worthy of their trust.
“For the board and investors: we will always be open and transparent so that we are able to grow to become a bank which both the employees and the various stakeholders are proud of,” said Anand, seated in the bank’s office in Lower Parel, Mumbai.
Rebuilding phase
Anand, sees his role at IndusInd a “once in a lifetime transformational opportunity” to rebuild a business, and to see it in a completely different shape over the next three-five years. “Opportunities of that nature don’t come to you on a daily basis,” said Anand.
The bank, he said, plans to grow in line with the banking industry’s growth rate in the first year. The second year should see IndusInd Bank grow faster than the market and finally in the third year, it should look at dominating certain segments. Anand did not share a growth guidance. However, rating agency Crisil expects the sector to grow 11-12% in the current financial year, on the back of lower indirect taxes and cheaper loans.
“We want to get to a 1% RoA (return on assets) in about 12 to 18 months,” said Anand, pointing to a metric that tracks how efficiently a company is able to generate profits using its assets.
This was the level the private lender last saw in the December quarter of FY25 when it was 1.03%. In the recent September quarter, RoA was at -0.33%.
Analysts cautious
Analysts believe that in the near term, lower returns are likely.
“With ongoing consolidation—including streamlining MFI, stabilizing slippages, identifying new growth avenues, and formalizing the leadership structure—sub-par RoAs are likely to persist in the near to medium term…” analysts at Macquarie Capital Securities (India) said in a note to clients on 20 October.
Data from Macquarie Capital showed that IndusInd Bank trades at 0.9 times its FY26 book value, while industry heavyweights like HDFC Bank and ICICI Bank are at 2.7 times and three times, respectively. Shares of IndusInd Bank on the NSE have risen 3.2% since Anand joined the bank and stood at ₹797.05 apiece on Friday.
Deposits over loans
Like its peers, IndusInd Bank’s loanbook is divided into corporate and consumer banking. Corporate loans accounted for 40% of all loans as on 30 September, while the remaining was in retail. Among the many retail segments is microfinance loans of ₹21,321 crore, or 7% of the total loanbook.
“We are hoping that some of the other businesses will start to grow as well and the dependence here (micro loans) will reduce,” said Anand.
While there is a push to add more assets, Anand said that the need for more and better liabilities or deposits is more pressing. The bank’s loanbook shrunk 9% year-on-year (y-o-y) to ₹3.25 trillion as on 30 September. Its deposits contracted 6% y-o-y to ₹3.89 trillion in the same period.
“I think we need to improve both the quality and quantity of liabilities. There is a lot of work that is happening particularly around improving our digital capabilities, improving our processes, refreshing the brand,” said Anand.
He said that the distribution channel for deposits is already in place with over 3,000 branches and an existing base of customers. The largest chunk of its branches—26%—are in the southern part of India, followed by Northern India (23%), Eastern India (20%), Western India (18%), and the Central region (13%).
“I think we need to do more from a (customer) acquisition perspective and so, therefore, we will fortify our acquisition engine, we will fortify our cross-sell engine to be able to deepen relationships with existing customers,” said Anand.
As part of the push for more deposits, the bank will revamp its mobile app, using it as a funnel for more customers and greater engagement. “Because you are using my mobile app, the probability that you will have more balance with us increases,” he said.
Leadership renewal
Meanwhile, the bank will also see a clutch of people leaving in the next few months and is in the process of replacing them. On 18 October, Anand told analysts that the bank hired a new chief financial officer, a head of internal audit, a legal counsel, the head of business transformation, while more joinees are expected soon.
“From a people perspective, one is to find replacements, two is to add to some of the skill gaps that I see at this point in time,” Anand told Mint.
Anand said he is meeting customers across the country and is also engaging with employees through town halls.
“We have done a whole bunch of town halls over the last month or so and we will continue to do that over the next couple of months to give them confidence of what we are trying to do and to also give them confidence that things are on the mend,” said Anand.
