Hinduja-backed IndusInd's new CEO Rajiv Anand seeks to cut risks in revamp

CEO Rajiv Anand has asked division heads to identify lapses in their businesses and submit improvement plans as part of a new three-year roadmap

By Siddhi Nayak and Saikat Das

 

IndusInd Bank Ltd.’s new chief is moving quickly to reduce risks on its loan book, according to people familiar with the matter, as he seeks to restore investor confidence after a series of governance lapses at the Indian lender.

 

In recent one-on-one meetings, Chief Executive Officer Rajiv Anand has asked division heads to identify lapses in their businesses and submit improvement plans as part of a new three-year roadmap to revitalise the Mumbai-based lender, the people said, asking not to be named as the discussions are private. It’s also seeking to diversify the bank’s loan book and reduce reliance on large deposits, they said.

 

IndusInd didn’t immediately respond to a request for comment.

 

Anand, formerly the deputy managing director at Axis Bank Ltd., one of the largest private sector lenders, took charge at mid-sized IndusInd last month. This followed the resignation of its previous chief in April after IndusInd revealed accounting discrepancies, sparking worries over earnings that wiped out more than a quarter of its market value in one day. The lender later said its board suspected fraud involving some staff.

 

IndusInd, in which the billionaire Hinduja family control a nearly 16 per cent stake, disclosed accounting discrepancies in March in its derivatives portfolio and suspected fraud in its microfinance business. This prompted senior-level departures and forced the bank to report a record loss in its fourth quarter. 

 

Anand has also asked his executives to sharpen the bank’s digital capabilities and streamline processes across various departments, said the people familiar with the matter, adding that the chief reassured employees that the lender will continue to hire staff despite the restructuring.

 

IndusInd’s loan assets fell 4 per cent to ₹3.3 trillion ($37.5 billion) at the end of June from a year earlier, while deposits declined marginally to ₹3.97 trillion, according to the bank. Gross non-performing assets stood at 3.64 per cent compared with analysts’ estimate of 3.03 per cent. 

 

The bank’s shares are down 20 per cent so far this year versus an increase of 6 per cent in the Nifty Bank Index, as the accounting issues took a toll on investor confidence.

 

IndusInd in July approved plans to raise as much as ₹30,000 crore, without specifying a reason.