IndusInd Bank has appointed a new boss—Rajeev Anand—and expectations are running high. Known for his strategic vision and risk management capabilities, Anand steps in at a time when the bank is grappling with several critical challenges, both operational and financial.
In recent months, IndusInd Bank faced significant turmoil due to issues linked with derivative-linked accounts. This controversy adversely impacted the bank’s balance sheet and raised questions over its risk management practices. With Anand at the helm, all eyes are now on how he navigates the current crisis and leads a turnaround.
One of the immediate challenges for Rajeev Anand will be to improve the bank’s shrinking margins. Once standing at around 4%, the bank’s net interest margin (NIM) has dropped to nearly 3%. This marks a major decline and is a key area where Anand’s leadership will be tested.
Equally concerning are the returns indicators. IndusInd Bank’s return on equity (ROE) has declined drastically from 1.7% last year to 0.45% in the recent quarter. Return on assets (ROA) has also weakened, falling to 3.71%. These declines reflect the pressure on the bank’s profitability and overall performance. The CET-1 ratio—a key capital adequacy indicator—has also seen a decline, adding to the list of issues Anand must address.
Another pressing concern is the bank’s slowing business growth. For some time now, the bank has been struggling to accelerate growth across its lending portfolio. Particularly troubling are the troubles in its microfinance (MFI) book. Micro loans and credit cards have witnessed a sharp increase in non-performing assets (NPAs), indicating underlying stress in asset quality.
In the consumer segment, sectors such as microloans, tractors, and cars are facing rising NPAs. The NPA ratio for the micro loan portfolio alone has increased from 13% to 16%. These deteriorating asset quality metrics need urgent attention, and Anand will be expected to implement corrective measures to contain and reduce the bad loan burden.
Rajeev Anand comes with over 35 years of experience in the banking industry and has previously served as Deputy Managing Director at Axis Bank. During his tenure at Axis, Anand was instrumental in achieving several key milestones. Under his leadership, Axis Bank’s wholesale banking market share expanded, stressed assets reduced, and risk exposures were brought under tighter control. One of his notable contributions was his significant involvement in Axis Bank’s acquisition of Citi’s consumer business in India.
Anand has a strong reputation for his expertise in risk management and has been known to play a vital role in strategic decisions at Axis Bank. His appointment at IndusInd Bank, therefore, comes at a crucial time when strong leadership is needed to restore stakeholder confidence, address operational inefficiencies, and implement structural reforms.
With IndusInd Bank currently navigating through a period of financial and reputational challenges, Rajeev Anand’s leadership is expected to be pivotal. The coming months are likely to witness strategic shifts and bold decisions aimed at improving asset quality, profitability, and overall governance. For now, the market and stakeholders will be closely watching how Rajeev Anand steers the bank through this transformative phase.
Disclaimer:
The information presented in this article is based on publicly available data, recent financial disclosures, and industry analysis. It is intended for informational purposes only and should not be construed as financial advice or a recommendation to invest in any securities. Readers are advised to conduct their own research or consult with a qualified financial advisor before making any investment decisions. The views expressed in this article are solely those of the author and do not necessarily reflect the official position of IndusInd Bank or any affiliated institutions.
