IndusInd Bank to Focus on Building Retail Loan, MSME Assets; Ramping Up Retail Liabilities in FY26

Ramping up retail liabilities, scaling secured retail and MSME assets, and being selective in the corporate space are some of the focus areas for the current fiscal, as IndusInd Bank is making efforts to come out of the financial mess caused by past frauds, its chairman Sunil Mehta has said.

Observing that FY25 was a watershed year for the bank, Mehta said, "This was also a year of internal reckoning. We faced certain challenges that required swift, transparent and decisive actions by the board and management. These events, while unfortunate, have catalysed a major transformation rooted in ethics, accountability, transparency and long-term sustainability".

The Hinduja family-promoted bank, which is reeling under a slew of issues stemming from alleged irregularities at the top management in recognising bad loans and trading reverses, had reported a consolidated net loss of Rs 2,329 crore for the March quarter of FY25.

In March this year, the bank reported a Rs 1,979 crore accounting lapse in its derivative portfolio, followed by its internal audit review finding Rs 674 crore incorrectly recorded as interest from microfinance business, besides a Rs 595 crore "unsubstantiated balances" in "other assets" of the balance sheet.

"We have acted decisively to pursue higher standards of governance, transparency, and accountability. This governance culture will continue to be reinforced as we move forward," he said in his message to shareholders in the bank's latest annual report.

The bank's balance sheet remains robust, supported by healthy capital adequacy, provision coverage, and liquidity levels, he said, adding that these fundamentals provide a robust foundation for future growth.

For the next financial year, he said, the bank is focused on ramping up retail liabilities (deposits), scaling secured retail and MSME assets, being selective in the corporate space, and executing our strategy through driving synergies and a unified 'One Bank' approach.

"The bank will continue to pivot its rural distribution towards Bharat Banking, while remaining watchful of the microfinance segment. Simultaneously, we are investing in scaling up existing and new initiatives, such as home loans, affluent banking, digital 2.0, merchant acquiring, and micromarket-driven distribution," Mehta said.

Earlier this month, IndusInd Bank announced the appointment of former Axis Bank Deputy Managing Director Rajiv Anand as its new MD and CEO after obtaining the RBI's approval. The appointment is effective from August 25, 2025, up to August 24, 2028, subject to the approval of the shareholders.

The situation arose after the resignation of MD and CEO Sumant Kathpalia on April 29, weeks after the disclosure of accounting lapses of Rs 1,960 crore to the lender in 2024-25.

"I sincerely acknowledge that the lapses, which occurred, are not what one expects from a Bank of our stature. The board and the management have undertaken a comprehensive deep dive into all issues brought to our attention, and they have been appropriately accounted for in the financial statements for FY25," Mehta said.

Stressing that the Board and the management are fully committed to ensuring a smooth leadership transition, Mehta said, "Anand will have the opportunity to begin with a fresh and clean slate and will be expected to scale this differentiated franchise with a strong ethical foundation. I believe the Bank has immense potential to deliver sustainable and profitable growth for years to come".

The board is working closely with the management to instil a cultural shift that prioritises ethics, transparency, and long-term sustainability in all the actions we undertake, he added.