Hindujas promoted IndusInd Bank has had a good run under its outgoing chief Romesh Sobti for over a decade. The bank grew in size and scale since 2007-08, which was when Sobti took over the helm of the lender.
After 12 years, Sobti is handing over the reins to Sumant Kathpalia who joined around the same time as Sobti in 2008. During his decade long stint at IndusInd Bank, Kathpalia is credited for building its consumer banking business and diversifying it to industry beating performance over years.
Total retail loan book of the bank grew to Rs1,14,131 crore in FY19 from Rs 10,082 crore year-on-year. Total vehicle loans of the bank stood at Rs 58,071 crore as of December 31, 2019.
“He has been a banker for about three decades, of which a decade has been spent with IndusInd Bank in building its consumer business. A safe bet for the bank as the new chief,” said one of Kathpalia’s senior colleagues in the bank. “He is also excellent in execution and strategy and has been instrumental in the bank's digitalisation drive as well,” the official said.
Prior to joining IndusInd Bank, Kathpalia, a chartered accountant, has had stints with ABN Amro bank, Citibank and Bank of America. Though he has operated across segments, he is best known for his expertise in the consumer business.
IndusInd Bank is one of the strongest among new generation private sector lenders with a strong retail loan book, a significant part of which is in vehicle financing.
Under Sobti, IndusInd Bank has carried out multiple acquisitions including the recent acquisition of Bharat Financial Inclusion, which was earlier known as SK Microfinance. The deal brought along a significant small loan book.
Sobti’s 12-year old stint will come to an end in March. In October last year, the bank said it has finalised a candidate for the top job and had sought Reserve Bank's approval for the same.
At his new role at IndusInd Bank, Kathpalia will face multiple challenges ahead. The main being taking the retail loan book beyond vehicle loans and grow confidence within the top management to further diversify the businesses beyond corporate and core-vehicle portfolios.
The challenge is tougher in a slowing economy.
In Q3, IndusInd Bank posted a 33 percent jump in its consolidated net profit to Rs 1,309 crore. Net non-performing assets (NPAs) are at a relatively low 1.05 percent despite increasing from 0.59 percent during the same period last year.
The industry will be closely watching the transition at IndusInd Bank. Top management changes in private sector banks have never been smooth.
For instance, in Yes Bank, after the exit of Rana Kapoor and appointment of Ravneet Gill as the new CEO, there have been a number of mid and senior management level exits. This was the same in ICICI Bank after Chanda Kochhar took charge as CEO.
Kathpalia will have to take the top management and the rest of the employees into confidence in his new role.