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Veteran banker Rajiv Anand takes charge as IndusInd Bank CEO

This could be Anand's most challenging role, as IndusInd struggles with earnings growth and a trust deficit in the aftermath of an accounting irregularities storm

By Salil Panchal Forbes India Staff

Published: Aug 5, 2025 12:33:47 PM IST

Updated: Aug 5, 2025 12:35:39 PM IST

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Indusind appoints Rajiv Anand as new Chief Executive Officer. Image: Mexy Xavier

Veteran banker Rajiv Anand will take charge as chief executive officer of the fraud-hit IndusInd Bank, the bank’s board of directors said late on Monday, after the Reserve Bank of India (RBI) approved his appointment. Anand, formerly deputy managing director at Axis Bank, will need to gear up for possibly his most challenging assignment.

He will lead IndusInd Bank, India’s fifth-largest private lender by assets, for a three-year term till August 24, 2028, as it struggles to deal with a trust deficit and weak earnings. This comes in the wake of a string of accounting irregularities involving its employees in previous years, which led to the hasty exits of the bank’s former MD and CEO Sumant Kathpalia and deputy CFO Arun Khurana.

IndusInd Bank, in July, reported a 72 percent drop in consolidated net profit for the three months to June 2025, with asset quality and income levels also showing stress for the quarter. In July, its Chief Human Resources Officer Zubin Mody quit, after a 20-year tenure, citing “new opportunities outside”. Following the exodus from the C-suite, a committee of executives ran the bank prior to Anand’s appointment.

Anand comes with 35 years of banking experience, having led key management positions at Axis Bank since joining it in 2009, including head of retail banking and later wholesale banking. The two other candidates running for the post included HDFC Bank’s executive vice president Rahul Shukla (a risk strategy veteran) and Anup Saha, who was the former managing director at Bajaj Finance.

In May, IndusInd Bank’s Chairman Sunil Mehta in an analysts call, said he suspected some bank employees to be involved in irregular accounting activities. Market regulator Securities and Exchange Board of India (Sebi), in a 32-page long interim order that followed its own investigation, banned five senior executives of IndusInd Bank from trading in securities on charges of alleged insider trading. According to media reports last week, Kathpalia has proposed to pay Sebi Rs 5.21 crore as charges to settle the insider trading allegations against him.

IndusInd Bank had ended FY25 with a quarterly loss—its first in nearly 20 years—besides lower income and weak asset quality. The bank stock has seen an erosion of 42 percent in the last year to Rs 802.2 from Rs 1,389 in August 2024 at the Bombay Stock Exchange (BSE). IndusInd Bank rose as much as 5.6 percent to a high of Rs 847 on Tuesday at the BSE, before losing gains to trade at Rs 812, still up 1.1 percent from the previous close. Net profit fell to Rs 604.05 crore for Q1FY25 from Rs 2,170.7 crore for the corresponding quarter in the previous year. Net interest income has fallen to Rs 4,640 crore in Q1FY26 compared to Rs 5,408 crore a year earlier. Asset quality has also fallen, with gross NPA (as a percentage of total advances) rising to 3.64 percent from 2.02 percent in the same period. Loan growth was flat for the year, and fell 6 percent for the March-ended quarter, while deposits edged up just 0.3 percent from the previous successive quarter.

“The bank’s financials now reflect full and fair representation of all the concerns brought to its attention. We want to start FY26 on a clean slate,” Sunil Mehta had told analysts in May. He said IndusInd Bank has a capital adequacy ratio of 16.24 percent and provisions of 70 percent. Its board is working with the management to bring in a cultural shift towards achieving the highest standards of ethics and governance.

Also read: Troubled IndusInd Bank shows 72 percent fall in profit in Q1FY26

What’s ahead for the bank now?

There appears to be little conviction among stakeholders to suggest that the bank will start FY26 on a clean slate and that it will be smooth sailing hereon. Anand will have to tighten internal controls, strengthen governance and likely rebalance the asset mix, implying a sharp slowdown in earnings growth for the next two years.

“Every other bank that has gone through accounting discrepancies or prior-period adjustments has taken three to four years to achieve a new normal,” Mahrukh Adajania, analyst, Nuvama Institutional Equities had said, prior to Anand’s appointment. However, she added that IndusInd Bank, being a large one, could take less time, but return on assets (RoA) would remain well below 1 percent through FY27. “Also, how retail depositors behave in the short term after back-to-back disclosures of prior-period adjustments is an unknown. The bank will thus need to maintain high liquidity at least in the first half of FY26E, impacting NIM in FY26.”

IndusInd Bank’s net interest margin has fallen 79 basis points (bps) to 3.46 percent in the June-ended quarter of 2025, from 4.25 percent a year earlier. One basis point is equal to one-hundredth of 1 percent.

In previous years, the bank has been hit hard, both during the Covid-19 pandemic and due to aggressive lending to IL&FS, much of it leading to increasing bad loans. Gross slippages rose to 3.7 percent between FY20-22.

RBI Governor Sanjay Malhotra, after the June monetary policy meeting, said that IndusInd Bank did not pose a serious systemic risk. “The MD and CEO has resigned, and it says so for taking moral responsibility. So, I thought that should be good enough,” he had told mediapersons on June 6.