Rope in a private banker: RBI may have told IndusInd Bank board on CEO replacement

IndusInd Bank

Try to bring in a chief executive officer from the private sector who are still in service. This seems to be the informal mandate from the Reserve Bank of India (RBI) to IndusInd Bank’s board of directors, which is set to meet soon to kick-start the search process for a CEO.

What RBI wants

According to sources aware of the matter, the RBI is in favour of hiring a private banker — from an Indian bank or a person of Indian origin working in a foreign bank in India or abroad.

Since the regulator envisages extensive changes in the bank, it has told the board that a candidate in the age bracket of 54–58 would be a good fit for the top job. Another quality seen favourable is a person with experience across verticals and portfolios.

“A person who has worked in treasury, handled the pressures of fee income generation, managed various assets classes and deposits and has a working knowledge of branch offices might be preferred,” said another source. “The ability of the candidate to attract talent from across the sector may also be an important box to tick.”

If the banker has the experience of handling different categories of investors, including promoters, that may be viewed favourably, said another person privy to details of the recruitment process.

Also read: PwC’s initial findings in IndusInd Bank might have necessitated forensic audit

Different from past 

Immediately after the accounting crisis broke out at IndusInd Bank it was speculated that, like in the case of Yes Bank, RBI Bank and Bandhan Bank, IndusInd Bank, too, may see a PSU banker taking over from Sumant Kathpalia.

The RBI doesn’t seem to favour this path, at least for now.

With a balance sheet size of roughly Rs 8 lakh crore as on December 31, IndusInd, promoted by the Hinduja Group, is India’s fifth-largest private bank.

“The RBI may want to use this opportunity to infuse fresh line of thinking and stability into the bank,” a source said.

For instance, Ashok Vaswani, who has completed over a year at Kotak Mahindra Bank, was supposedly roped in from the US to bring in a “fresh perspective” when Uday Kotak stepped down as the CEO in September 2023.

Vaswani has experience across foreign banks such as Standard Chartered and Barclays and a banking career spent entirely outside India.

Also read: IndusInd Bank key officials under Sebi lens for alleged insider trading

When Axis Bank’s CEO Shikha Sharma’s term was extended by less than a year in 2018, the bank roped in Amitabh Chaudhry from HDFC Life Insurance to replace her. He is now in his third term as Axis Bank CEO.

Earlier this week, Moneycontrol reported that global search firms such as Egon Zehnder and Korn Ferry may be roped in for the CEO search, apart from other key managerial roles.

While formally the process is expected to start in a week or so, a few “suitable” bankers have been sounded off, sources said. “But it’s in very initial stages and may take time till October for a name to emerge,” a source said.

On March 10, while addressing investors in a call to explain accounting lapses in certain derivative contracts which may cost the bank around Rs 1,500 crore of its profits in the coming quarter, Kathpalia said the RBI may not be comfortable with his leadership style. He was responding to a question on why the central bank extended his term by a year against the three years sought by the board.