IndusInd Bank is aiming to rejuvenate business growth not just in current year but for the foreseeable future, and is targetting to grow in-line with the banking industry in FY27 and gain market share in FY28, MD & CEO Rajiv Anand told businessline in an interaction. The bank’s loans deposits de-grew on a yearly basis in Q3 FY26 as the management focused on making significant changes in its leadership team, both on assurance and business side. Anand talks about the bank’s business strategy after it suffered material losses due to the discrepancies found in its derivatives portfolio last year and possibility of raising capital going ahead. Excerpts:
When do you see business growth reviving?
There has been a significant change in the team, both on the assurance and business side. By March 31, much of that will be done and a brand new team will be in place. So the intent of the team is to rejuvenate growth, not just for this year but for the foreseeable future. Our ambition is to grow assets and liabilities in line with the market in FY27, and start to gain market share in FY28. And then dominate in some of our focused areas in the third year. That is broadly how the next three year plan looks like.
What would be the spilt between secured and unsecured loans?
Let me put it a bit differently. The vehicle finance business is around ₹1 lakh crore, corporate loans book is around ₹1.3 lakh crore, and microfinance business is about ₹20,000 crore, and all other retail businesses are about ₹50,000 crore. So to that extent, we have a big opportunity to grow our SME loans. We see opportunity in growing secured retail advances like gold loans, affordable housing etc. We don’t have a target on secured-unsecured loan mix as such.
Our largest portion within unsecured loans is micro loans. We want to continue growing micro loan book and expect it to form 7-8 per cent of our loan book. We also understand these loans are cyclical in nature, so we have started to use the credit guarantee scheme. As of now 38 per cent of micro loan book is covered under the credit guarantee scheme and we expect it to be fully covered under the scheme next year. Micro loan segment also helps us meeting PSL guidelines, both agri and small and marginal farmers. Further, slippages have reduced in the micro loan segment in the industry over the last year.
Credit cards are a very large part of our portfolio and it is a critical instrument to maintain engagement with our existing customers. To that extent, yes we do intend to grow this segment. We will be cautiously growing this segment as risk appears elevated in industry. There is a difference now in the way we are building our credit cards business. Earlier, a pre-dominant part of the business was coming from new to bank customers, now we are pivoting to building business on the back of servicing existing customers. We add roughly 150,000 customers at the bank each month, which gives us a large opportunity to engage with this customer base. The breadth and offering we have on credit card side, both on mass and affluent segments is very good. We are confident we will be able to grow this business.
How do you plan to reduce share of bulk deposits?
For any bank, and certainly for IndusInd, building a granular, retail liability franchise is absolutely critical. We have the brand, and distribution of little over 3,000 branches across country. In specific context of our bank, it becomes very critical because we also have a fairly lumpy liability franchise where we have bulk deposits and intent is on reducing dependence on such deposits. We will continue to focus on improving product offering for customers, improving productivity at branches, enhancing salary accounts and getting government business. We are also tapping start-ups, all these measures are towards gaining stickier retail deposits, and it will reduce our cost of funds going forward.
Guidance on NIM…
We are focused on improving return on assets (RoA). As mentioned, we are targeting to grow in-line with industry in FY27 and exiting next fiscal with 1 per cent RoA. As we think about more granular asset businesses, diversifying asset businesses, NIMs could be somewhat lower but we have ample opportunity to be able to make up for it due to lower cost to assets and lower credit cost.
Will you do more leadership hirings?
We have on-boarded a new chief risk officer-designate, as existing CRO will retire in next fiscal. And we have a new chief information officer. We expect more senior leadership hires in retail segment.
When do you plan to raise capital. How much weight do promoters carry in making strategic, important decisions?
As far as capital is concerned, at this moment we don’t need capital. Will we require it after 18-24 months? Yes. By then we would anticipate that growth has come back and it is under those circumstances that we would need capital. Once we decide to raise capital, the question is whether it should be done from a strategic investor or a QIP or other avenues. Those questions will be answered at that period. This is a board run company. All decisions that impact IndusInd Bank have to be decided by the board. That is how we run this bank.
