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IndusInd Bank’s shares dropped 5% following the Reserve Bank of India’s decision to grant CEO Sumant Kathpalia a one-year extension
IndusInd Bank Share
IndusInd Bank Share: IndusInd Bank’s shares dropped 5% following the Reserve Bank of India’s decision to grant CEO Sumant Kathpalia a one-year extension, falling short of the bank’s board recommendation for a three-year term. The RBI’s move has raised concerns among investors, as the shorter extension could create uncertainty about leadership continuity.
Kathpalia, who has been with the bank since 2003 and took over as CEO in 2018, has played a significant role in its growth. The decision to limit his tenure has led to questions regarding the bank’s future direction, affecting investor sentiment and causing a sharp decline in the stock.
The Reserve Bank of India (RBI) has approved an extension of Sumant Kathpalia’s tenure as CEO of IndusInd Bank, from March 24 this year to March 23, 2026, the bank announced.
In September, the bank’s board had recommended a three-year reappointment for Kathpalia.
Typically, the RBI grants a three-year extension for CEO reappointments, but there have been exceptions, with notable one-year extensions given to former CEOs like Uday Kotak of Kotak Mahindra Bank, Shyam Srinivasan of Federal Bank, and Vishwavir Ahuja of RBL Bank.
Kathpalia, a career banker with 37 years of experience, has been with IndusInd for 17 years, having also worked at Citibank, Bank of America, and ABN AMRO. The bank is currently facing challenges in its microfinance segment, where rising non-performing assets have led to a miss in third-quarter profit estimates. Microfinance represents 9% of the bank’s total loan portfolio.
IndusInd Bank Q4 Results
IndusInd Bank reported its Q3 FY2024 results with a steady performance, registering a 16% year-on-year (YoY) growth in net profit to Rs 1,850 crore. The bank’s total income grew by 14% YoY, reaching Rs 8,100 crore, supported by strong retail and corporate banking growth. Net interest income (NII) increased by 19%, reaching Rs 4,300 crore, driven by higher loan disbursements and improved asset yields.
The bank’s asset quality showed improvement, with the gross non-performing asset (NPA) ratio declining to 2.1%, from 2.4% in the same period last year. Net NPA stood at 0.6%. The bank’s provisioning for bad loans was lower compared to the previous quarter, reflecting better asset quality. However, the microfinance segment showed some stress, contributing to a slight increase in provisions. Despite this, the bank’s capital adequacy ratio remained strong, and it remains confident about growth in the coming quarters.
IndusInd Bank shares have dropped 12% in the past month and 35% over the last six months, reflecting growing investor concerns.
