India's IndusInd Bank expects to grow in line with the country's banking sector next year, following efforts to clean up its books and complete an organisational overhaul triggered by accounting lapses earlier this year, its new chief said.
The bank, whose largest shareholder is the UK-based Hinduja family, found itself in the midst of a crisis as governance and accounting lapses led to the exit of its former CEO Sumant Kathpalia and deputy Arun Khurana. The bank took a $230 million hit to its accounts and posted its largest-ever loss in the quarter ended March 31.
In the September quarter - the first under new chief executive Rajiv Anand - the bank reported a net loss as its loan and deposit portfolios shrank.
"Financial year 2026-27 is when we start to grow broadly in line with the market, particularly on the deposits side," Anand told Reuters in an interview in Mumbai.
The following year, the bank will look to grow its market share and eventually dominate a few chosen segments in its third year of turnaround, he said.
Anand, a veteran banker previously with Axis Bank, said IndusInd aims to move towards a return on assets (RoA) - a metric that shows how efficiently a bank uses its assets to generate profits - of 1% over the next 12-18 months.
Its RoA had been close to this level before the governance and accounting lapses led to a negative RoA.
These lapses also weighed on the bank's stock this year, which has dropped 18% so far in 2025, compared to an 8% rise in the benchmark Nifty 50.
However, IndusInd will likely not use a capital raise from well-known investors as a way to shore up investor confidence, in contrast to a number of Indian lenders recently raising foreign capital, sparking a rally in stock prices.
"At this point, we don't need capital either from a safety or a growth viewpoint. We have adequate capital to support us at least for another couple of years," Anand said.
"I do believe that bringing in money at this point in time, when the bank does not require capital, could potentially backfire."
GROWTH FOCUS
The bank will continue to grow its "crown jewel" of commercial vehicle financing, a sector it dominates with a loan book worth 358.80 billion rupees ($4.08 billion).
However, it plans to pare its microloan portfolio because of the volatility in the business, according to Anand. The bank is comfortable maintaining a market share of 6-8% in the microloan industry, down from over 10% currently, he said.
IndusInd Bank will also explore new business opportunities, such as wealth management, acquisition financing and loans against shares, once regulatory norms are in place, he added.
"Some of the newer businesses will certainly be of interest after regulatory easing, such as the loan against shares business, particularly given the investors coming into the market and the strong HNI (high net worth individual) business we have. That is certainly attractive to us," he said.
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