Next Story
Newszop

IndusInd's new MD likes a challenge: Rajiv Anand faces big task as he tries to rebuild trust, overhaul business

Send Push
Rajiv Anand steps into the role of managing director and CEO of IndusInd Bank at a pivotal moment, with several formidable challenges waiting on his desk-from reshaping its business mix to reduce vulnerability to economic cycles to assembling an entirely new senior leadership team. He will need to rebuild the bank's low-cost deposit base to improve margins and long-term stability, industry watchers said.

Anand is unfazed. "I just felt that here is a challenge I would like to take up and hope to give it my best shot," he told ET. He came out of retirement to take up the challenge. "I was planning to retire but then this opportunity came up. I discussed it with my wife who said, 'If it is going to make you happy, just go for it,'" he said. Anand, 59, had announced his retirement from Axis Group in April this year after a 16-year stint.

On Tuesday, the Reserve Bank of India chose him for the top post among the three candidates proposed by the troubled bank. Anup Saha of Bajaj Finance and Rahul Shukla of HDFC Bank were also in the fray. With over 35 years of experience across various segments of financial services, Anand was seen as a strong fit. He will take charge on August 25.

IndusInd shares rose as much as 6% and closed 1.9% up at ₹819.20 on the BSE in weak trading on Tuesday, as investors cheered Anand's appointment. But his road ahead is far from easy. Nearly 40% of IndusInd Bank's loan book is concentrated in vehicle finance, microfinance, and the gems and jewellery segment-areas prone to sharp cyclicality.


The bank has seen a steady erosion in its low-cost deposit base. Its CASA (current account and savings account) ratio has fallen by nearly 11 percentage points over the last four years, dropping to 31% at the end of the June quarter. Over the past year alone, IndusInd's CASA book declined by 6%. Net interest margins (NIM) are under pressure, having fallen 79 basis points year-on-year to 3.46% as of June end. Asset quality has also weakened, with the gross non-performing asset (GNPA) ratio rising 162 basis points over the same period to 3.64%.

"While we have always believed that a private sector CEO is an absolute must for IndusInd Bank, considering the vagaries of its portfolio, the issue is that any new CEO now has his task cut out," said Suresh Ganapathy, head of financial services research at Macquarie Capital.

"A lot of clean-up is needed...De-risking and consolidating the balance sheet, exit of the old management, bringing in new people-there are many changes that must be executed," he added. One of the most pressing issues for Anand would be rebuilding the leadership bench. The bank is currently searching for two whole-time directors, heads of consumer and commercial banking, a chief operations officer, chief financial officer, and chief human resources officer.

Despite the enormity of the task, Anand appears confident to manage the pressures of the job while also making time for his personal interests. "I think the important thing is to get a balance, and I'm hoping that I will be able to make time for my other passions," he said. "Because, to sustain your sanity, you need some release valves."

Anand is an avid golfer.

Reflecting on his career, he recalled the two toughest periods he has faced professionally. "During the 2008 crisis, I was a fund manager. Liquidity was tight, markets were very volatile and illiquid. Managing money, customer expectations, and redemptions at that point in time was one of the toughest moments in my career," he said. "The other was during demonetisation. There was no playbook. The initial 3-4 months were very stressful."

When Anand takes charge of IndusInd Bank later this month, all eyes will be on how he navigates the twin challenges of rebuilding trust and strategic business overhaul.
Loving Newspoint? Download the app now