Leadership transition is well on track, says IndusInd Bank Chairman Mehta

Chairman Sunil Mehta says CEO selection is with RBI; bank strengthens governance, cost controls, and collections to restore profitability

The leadership transition at IndusInd Bank is well on track, with the bank’s board awaiting the Reserve Bank of India’s (RBI’s) approval on the chief executive officer (CEO) recommendations it has submitted, Chairman Sunil Mehta said on Monday.

 

Speaking to analysts after the bank’s first-quarter earnings, Mehta said the lender is actively identifying both internal and external candidates for senior management roles.

 

“The leadership transition at the bank is now well on track. We’ve made good progress on the CEO appointment. The recommendations were submitted within the prescribed timeline and are currently under regulatory review,” he said. He added that there has been no change in the CEO recommendations submitted to the RBI.

 

“In addition, the bank is actively scouting for top-quality talent, both internally and externally, for broader senior management roles,” he said.

 

The RBI had given the board until June 30 to submit its list of candidates for the managing director (MD) and CEO position. This followed the April resignations of MD and CEO Sumant Kathpalia and deputy CEO Arun Khurana, who stepped down over accounting lapses. The bank’s chief financial officer and chief human resources officer had also quit.

 

The bank formed an executive committee to oversee operations after the CEO’s resignation. That committee’s three-month term ends today. Last week, the RBI approved an extension of its tenure by one month.

 

Mehta said the bank has implemented stronger transparency and compliance standards following the accounting lapses in its derivatives and microfinance books identified in the previous quarter. 

 

“In treasury, we’ve stopped internal deals. We’ve also begun upgrading the treasury system to the latest version, which offers enhanced trade management, controls, and monitoring,” he said.

 

He added that governance at the bank’s microfinance subsidiary, Bharat Financial Inclusion, has been “significantly improved”, with greater transparency introduced. The bank is also reviewing board and management oversight and operational control at the subsidiary.

 

Mehta said the bank has set up a dedicated cross-functional project management office to benchmark internal controls and policies against industry best practices and bridge any gaps.

 

Looking ahead, Mehta said the bank is pursuing new priorities while building a foundation for sustainable growth.

 

“We are confident of building a strong management team that will unlock this franchise’s true potential, underpinned by a robust governance framework,” he said. Even as the search for a new CEO continues, the board and management have agreed to adopt a “profitability-first” approach, along with a cost management plan to drive growth.

 

“We’ve taken measures such as reducing the focus on savings accounts and de-emphasising growth in lower-return businesses through effective fund transfer pricing to restore the profitability of the organisation towards its underlying potential. A robust cost management plan has been identified and is being implemented across all business units, even as future-focused investments continue apace,” Mehta said.

 

The bank will also step up its recovery efforts from slippages. “We’re targeting a recovery run rate for the year that’s comfortably ahead of the past couple of years,” he added.