IndusInd Bank wants to increase market share in CV business to 10%, says CEO Rajiv Anand

Rajiv Anand, MD & CEO, IndusInd Bank

• IndusInd Bank aims for 1 percent ROA by FY27, up from 0.1 percent in Q3 FY26
• Commercial vehicle financing and microfinance segments show signs of recovery
• Bank plans to boost retail deposits, expand SME and home loan businesses

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Confident that the underlying machine is starting to chug along, Rajiv Anand, who completes six months as IndusInd Bank managing director and chief executive officer, tells Moneycontrol in an  interview that the worst may be over.

Optimistic about the bank’s commercial vehicle financing business, Anand is working on garnering more deposits from CV-specific branches. He expects that provisioning costs to get look and plans to close the next fiscal (FY27) with a return on assets of 1 percent, a tall order after the private lender clocked an ROA of 0.1 percent in the December quarter. That said, with problems in the microfinance segment nearing an end, he is confident of better days ahead. Edited excerpts of the interview:

IndusInd Bank bettered market expectations by posting a small profit in the December quarter. Has the bank convincingly returned to profitability on a sustainable basis?

What December 2025 quarter basically showed you is that the bank is on the mend. We have continued to increase our provisions but the important part is that our pre-provisioning operating profit (PPOP) numbers have increased sequentially, which basically means that that the underlying machine is now beginning to chug along.

If you look at it from the asset side of the balance sheet, disbursements in our commercial vehicle business, which was relatively weak in Q2 because of GST related issues, has improved. We had very strong disbursements.

Everyone will be proud of IndusInd Bank in three years, says MD Rajiv Anand

In microfinance business, we made a comeback in Q3 and I believe (issues in) the micro finance business have bottomed out from growth and slippages perspective and we should see much better numbers going forward.

Has the bank moved past heavy provisioning for asset quality issues?

A very large part of slippage that you saw was coming from the microfinance. Slippages are within a range because of some of the internal work that we have done from an underwriting perspective, and what we are seeing at an industry level as well. Going forward, slippages will be significantly better than what we have seen in Q2 and Q3 of FY26.

When will the concerns flagged by Bharat Financial Inclusion Ltd's auditors be fully addressed?

All issues, whether it is in the bank or in BFIL from a financial perspective, have been addressed. If there are any provisions to be made, they have been made. Now the processes is to be able to work towards staff accountability, control gaps and so on. Even within that, a significant component is done.

What’s your guidance for FY27?

We will close the year at 1 percent ROA at least on an exit basis. That is the ambition.

In the past, the bank has tried to reduce dependence on the commercial vehicles business. What is your assessment?

It's a fantastic business which was not built overnight but over decades. I have met many customers of our CV franchise and these are deep relationships. Whether it is the large OEMs or dealers or small-fleet owners in this country, they really value the relationships that we run with them. It's a stable business. Obviously it is somewhat impacted, given the size that we have and also by the cyclicality of the business.

MFI biz to remain precious to IndusInd Bank, says CEO Rajiv Anand

My intent is to continue to grow that business. Today we are at about a 7 percent market share. I want to increase that to 9–10 percent. Given that these relationships are strong, I believe we can bring ‘One IndusInd’ approach to these customers. We can sell a lot more in addition to CV financing and that is a massive opportunity.

Are you curtailing lending opportunities due to a challenging deposit environment or are you slowing deposit growth till you get all processes in place?

It's a little bit of both. On the deposit side, we want to increase the granularity of our retail franchise and we are letting go of some of the high cost deposits. We are looking to replace that with more retail, low-cost deposits. That is playing out on the liabilities side.

We are shedding some of the low-yielding large corporate assets, which are not making us money. These are relatively shorter-term large corporate loans and we are looking to replace those with SME and mid-market corporate loans. There is some balance-sheet churn happening on the assets and liabilities sides, so that we are well prepared with a solid balance sheet as we get into the new fiscal.

Do you envisage paying a little higher for deposits to be competitive in the market?

Deposit market is very competitive at this point in time. Price is only one of the things that we will compete on. We already have 3,000 branches and our need to produce a lot more than what we're doing today. We are working on optimising our branch franchise and add liability raising to our CV branches.

We are working on improving our systems, processes, and customer experience that we are delivering across our channels. We are working on some issues in the digital side as well. There is a brand refresh that we are working on, which should begin to play out by Q1 FY27. It is a multi-pronged attack to be able to be competitive and attract deposits at the right price in a very competitive market.

What about margins? IndusInd Bank was an early mover to demonstrate that with MFI business in place, 4 percent plus net interest margins is achievable.

One can optimise for NIMs but it could come at a very high cost-income ratio or a very high credit costs. What I'm looking to do is optimise at the ROA level. Therefore, adding many of the other businesses could perhaps impact NIM from an immediate-term, perspective but given the operating leverage that we have, we should be able to reduce costs and reduce credit costs, thereby improving ROA.

Talk us through some of these new segments.

What I need to now add are what I call the balance-sheet stabilisers like a home loan business, SME business and then, as we build the retail side of our liabilities, we can widen the asset side. The balance sheet will start to look more like a universal bank as opposed to a bank which was focused on just two segments (MFI and CV). That is work in progress. We want to grow in line with market in in FY27 and have a line of sight to get to about 1 percent ROA as exit that year. This (new products) is a route to achieve some of these things.

Have your large clients supported you through the tough times?

I have not had any conversations where customers have said they don't want to do business with us.

What sort of conversations are you beginning to have with your large clients? Are they showing interest in private capex which is starting to be picking up?

In many of these transactions, we do have a seat on the table and it is really up to us whether we want to participate or not. Maybe it doesn't make sense from a pricing perspective or the tenors don't work for us. In some cases, the size of the transaction is perhaps little large for us but I think corporates are very happy to do business with us.

If you were to raise equity capital, what kind of investor would you look to bring on board?

I think stage one is deciding the appropriate time for us to raise capital. Once we do that we would know whether to do a QIP or a preferential, (rope in) a strategic or private equity etc. The good thing is that given the state of the markets, there are ample options. Private equity money has come in. Strategic investors have come in from the Middle East and Japan. There is enough local money available. Therefore, how we want to build out our capital structure is something that we will have to think through. I'm not in a state today to say I don't want private equity or I want a strategic or vice versa. The fact that all these options are open is very comforting.

The reason why your quizzed on capital raise is that firstly, you have plans to expand into new segments and secondly, even some of the large banks are anticipating capital requirements given the expected credit loss (ECL) guidelines implementation in a year. When would you start assessing the capital needs?

We have ample capital, including for ECL, which kicks in from April 1, 2027. We need to build for it over four years. It's about 1.5 percent (impact), which we will have to provide for and there is still time. We will evaluate all options and look to raise capital at an appropriate time.

While 60 percent of the bank’s book is retail, it doesn’t enjoy the perception of a retail bank in the market. What is missing?

The brand, distribution, our digital and technology capabilities are reasonably strong. The issue is that all this infrastructure is not producing enough. It is a productivity issue rather than a product issue, which we are working on. We need to improve our processes, systems, controls and have a more customer friendly journeys across various channels. We need to improve TAT (turn-around time) on service delivery, grievance redresses, etc. As we think about this holistically, our ability to deliver a differentiated experience to customers will change and the bank’s ability to sell more products and services to customers will improve from a cross sell perspective.