The biggest challenge for IndusInd Bank under the new leadership will be to balance growth along with credibility, Abizer Diwanji, Founder, NeoStrat Advisors LLP said, adding that Rajiv Anand is a good choice to lead as the CEO as he has demonstrated the ability and the track record to deliver growth.
Abizer Diwanji, Founder, NeoStrat Advisors LLP told CNBC-TV18 during a conversation on August 5 that it will be imperative for the bank to generate growth, going forward, but a key man should not be driving sentiment at the lender. "...it’s a pity that even today, it is the key man who kind of drives sentiment. The key man should not drive the sentiment, the trust in the organisation should drive the sentiment."
Rajiv Anand is a veteran banker and the deputy managing director at Axis Bank, with key management roles in the past at leading financial institutions.
Read More: IndusInd Bank – Will the new leadership pave the way for a rerating?
The bank's shares have reacted positively, rising over 5 percent on the announcement, as several analysts believe the move could pave way for a turnaround at the bank, after a prolonged turmoil over accounting lapses. "The biggest challenge he would have is balancing growth and credibility, creating the trust in the organization," said Diwanji.
The legal expert added that he is confident the Return on Asset (RoA) issues at the bank are not systemic, and will need a one-time adjustment. "RoA issues in IndusInd seem to be one-time adjustments. This is not a systemic lower profitability gain. So once the adjustments are taken care of, there will be a good adjusted RoA to work on, but he needs to build a trust organisation going forward," said Diwanji.
IndusInd Bank's RoA has seen fluctuations, with the March 2025 quarter number at 0.5 percent, as compared to 1.8 percent in FY24. Read More
According to Crisil, this fall is partly due to one-time issues and the utilisation of contingency provisions. It added that the bank is expected to gradually recover, with projections estimating a return to 1 percent RoA by FY28. A rise in loan slippages, particularly in the microfinance business, added to its NPAs and hurt profitability.
Diwanji said investigative agencies may be able to put the issues at the bank behind, and the credibility of the organization will ensure that it sails through this period. He added that the bank needs to find a niche, and then focus on it, as the retail lending story may be 'too crowded', and also said that not many lenders have delivered in the project financing segment.
He added that a large part of the churn at the bank may have already happened, and hoped the new CEO is able to get a good team in place.
A Citi note has said that Anand's banking experience and track record of over three decades in scaling retail and corporate businesses will be a key positive. Emkay Global said the move can trigger an early turnaround for the lender, while Jefferies has reiterated a 'Buy' call on IndusInd Bank.
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