Cleanup, derisking key challenges before new IndusInd MD & CEO Rajiv Anand

Consolidation of balance sheet likely to top Rajiv Anand's agenda at the bank

IndusInd Bank late on Monday night announced the appointment of veteran banker Rajiv Anand as managing director (MD) and chief executive officer (CEO) for three years, effective August 25. 

The appointment has been approved by the Reserve Bank of India (RBI), but is subject to shareholder approval. Anand was one of the three recommended by the bank’s board to the RBI for the position. The RBI had given the board until June 30 to submit its list of candidates for MD & CEO of the bank. 

Anand’s appointment as MD & CEO follows the resignation of Sumant Kathpalia, former MD & CEO of the bank, in April. Kathpalia had taken moral responsibility for the accounting lapses at the bank. 

Additionally, former deputy CEO Arun Khuran had also stepped down in April over the same accounting lapses. 

In Q4FY25, the bank reported a loss of ₹2,329 crore as it substantially ramped up provisions and reversed incorrectly booked revenue and income entries linked to accounting discrepancies. These were in the derivatives and microfinance segments discovered during the quarter. 

During the Q1FY26 analyst call, Sunil Mehta, chairman, IndusInd Bank, said the financial impact of the legacy issue is “now behind” them. And, the bank is pursuing new priorities while building a foundation for sustainable growth. 

Anand’s task is cut out when he officially assumes charge in August. 

“We have always believed that a private sector CEO is an absolute must for IndusInd Bank, considering the vagaries of its portfolio. (The) issue is any new CEO now has his task cut out. Lot of clean-up has to be done, de-risking and consolidation of balance sheet, exit of old management, new people will be brought in…So many changes to be done…,” said Suresh Ganapathy, MD, head of Financial Services Research, Macquarie Capital. 

Anand’s appointment seems to have boosted IndusInd Bank share, which closed 1.9 per cent higher at ₹819.20 on the BSE on Tuesday. 

The bank’s shares have fallen as much as 10 per cent from March 10 after the management announced that it discovered discrepancies in the derivatives portfolio. Anand is a career banker with over three-and-a-half decades of experience in financial services. He is known for his strengths in capital markets, and successfully scaling retail and corporate businesses. He has been associated with Axis Bank for over 13 years and served on its board since 2013. 

Most recently, he was deputy managing director at Axis Bank from October 2021, overseeing key functions such as wholesale banking, digital banking, marketing, and corporate communications. Prior to that, he headed the wholesale banking division, and before that, retail banking. As president of retail banking at Axis Bank, Anand achieved several key milestones. Before joining Axis Bank, Anand was MD & CEO of Axis Asset Management. He also held senior roles at Standard Chartered Bank, where he headed investments, as well as in HSBC, ANZ Grindlays Bank, and IDFC Asset Management. Anand holds a degree in commerce and is a qualified chartered accountant. 

“In our view, Anand does have diverse experience as he has led the wholesale and retail segments of Axis Bank and was also responsible for handling its digital agenda. Further, we think IndusInd Bank needs a CEO who is a private sector banker given the distinct characteristics of the bank's portfolio — vehicle finance, microfinance, gems and jewellery constitute 40 per cent of the loan portfolio (Q1FY26). Under the current circumstances, we believe this could possibly be a good option for IndusInd Bank,” said Macquarie Research in a report. 

In the past, private sector banks have witnessed the appointment of state-owned bankers as MD & CEO during periods of turbulence to stabilise operations. Prashant Kumar, formerly with the State Bank of India (SBI), took charge as MD & CEO of Yes Bank during its reconstruction phase. 

Following Vishwavir Ahuja’s exit from RBL Bank, R. Subramaniakumar, a former public sector banker, was appointed MD & CEO. Similarly, at Bandhan Bank, after Chandra Shekhar Ghosh stepped down, Partha Pratim Sengupta assumed the role of MD & CEO. But, with Anand being appointed as MD & CEO of IndusInd Bank, this trend has been bucked. “As the promoter of IndusInd Bank, we offer full support and wish him (Anand) all success. We trust that with his vast experience, he will be able to realise the full potential of this strong private bank franchise,” said Ashok Hinduja, chairman, IndusInd International Holdings Limited (IIHL) — promoter of IndusInd Bank.