IndusInd Bank CEO Selection On Track, RBI Review Underway: Chairman

After the derivative accounting fiasco, the leadership transition of IndusInd Bank Ltd. is "well on track", Chairman Sunil Mehta told analysts in a call after the April-June earnings announcement on Monday.

He said that the private sector bank has submitted its recommendations for the new chief executive officer to the Reserve Bank of India within the stipulated June 30 deadline. The central bank is currently reviewing the proposals.

"There is no change in the timelines for the CEO appointment. RBI is in the process of approvals," Mehta told analysts in the post-earnings call.

Once appointed, the new CEO will lay out a detailed strategic roadmap and implement the same, Mehta said.

As per media reports, the frontrunners for the top job include Anup Saha, who recently resigned as MD of Bajaj Finance; Rajiv Anand, deputy MD at Axis Bank who is due to retire in August; and Rahul Shukla, former group head at HDFC Bank.

Currently, a committee of two senior executives are managing the bank in the absence of a full-time CEO and have been granted time till Aug. 28. The original deadline for the committee was set for July 28.

Mehta also said that the board of the bank, along with the management, aligned on five key focus areas, including improving profitability, tighter cost control, sharper recovery efforts, strengthening the 'One IndusInd' brand identity and deeper stakeholder engagement.

Answering to a query on hiring senior management, Mehta said that some senior management members of the bank were also superannuating and that the bank was looking at internal and external candidates to fill any gaps.

He also said that the management leadership team was being looked at very closely and was hopeful that all these positions would be filled up in due course.

"As we move towards building the new leadership team and once we have the new MD and CEO in place, we will also look at bringing in two whole-time directors in due course," he said.

The clarity on succession comes at a crucial time for IndusInd Bank, as it looks to turn the page after the regulatory scrutiny on derivatives accounting related disclosures earlier this year.

In April, IndusInd Bank MD and CEO Sumanth Kathpalia and Deputy CEO Arun Khuranna announced their immediate resignations, taking moral accountability of the derivative accounting episode.

The investigations and reviews found involvement of senior officials and former managerial persons in overriding key internal controls.

The bank has also found concealment from board and statutory auditors and has reason to believe that suspected offences involving frauds may have been committed.

Without any one-offs, the private sector bank reported a standalone net profit of Rs 684 crore in the June quarter, as against a loss of Rs 2,236 crore in the preceding quarter.

Mehta said that the bank has reported stable profitability metrics and believes that the financial return metrics are still below potential and admits there is scope for significant improvement from here on.

He said that the bank is actively working towards near term opportunities and that compliance and governance culture remains the lender's primary area of focus.