IndusInd Bank CEO Reappointed, But Only for a Year – Here’s Why

Private lender IndusInd Bank received the Reserve Bank of India's (RBI) approval on March 7 to reappoint Sumant Kathpalia as its chief executive officer and managing director. However, there is a caveat— the central bank has only approved Kathpalia’s tenure extension for one year, from March 24, 2025, to March 23, 2026.

In September last year, IndusInd Bank’s board of directors had recommended a three-year term for its MD & CEO.

Moreover, the usual tenure granted to banking chiefs by the RBI has been three years, barring a few exceptions such as former Kotak Mahindra Bank CEO Uday Kotak, former Federal Bank CEO Shyam Srinivasan, and former RBL Bank CEO Vishwavir Ahuja.

Kathpalia to Join the Exception List?

Kathpalia has been with IndusInd Bank for 17 years, joining in 2008 as the Head of Consumer Banking. He was first appointed as the Managing Director (MD) and Chief Executive Officer (CEO) on March 24, 2020.

Before his tenure at IndusInd, Kathpalia held senior positions in major multinational banks, including Citibank, Bank of America, and ABN AMRO, where he served as Head of Consumer Banking in India.

During the last reappointment round in March 2023, the RBI had approved a two-year term for Kathpalia instead of the three years initially recommended by the bank’s board.

Many reports attribute the shorter tenure to rising stress in the private lender’s microfinance business. The microfinance portfolio accounts for 9% of the bank’s total loans. In the third quarter of FY25, non-performing assets (NPAs) in this segment rose to Rs 2,432 crore, up from Rs 2,259 crore in the previous quarter. This deterioration significantly impacted the bank’s overall asset quality.

"We remain cautious about the microfinance segment. While slippages in this segment may remain elevated for another quarter, our customer base is showing early signs of stability, which should start reflecting from Q1FY26 onwards," CEO Sumant Kathpalia said in an earnings call in January.  

During the quarter, the bank’s provisions and contingencies surged by 87% to Rs 1,744 crore, up from Rs 933 crore in the same quarter last year.