Ashok Hinduja, Chairman of IndusInd International Holdings, addressed mounting concerns about IndusInd Bank’s financial stability and transparency in an exclusive interview with CNBC-TV18. The discussion focused on recent discrepancies in the bank’s derivative portfolio, investor anxieties over a ₹1,520 crore treasury loss, and the promoters’ commitment to the institution’s long-term success.
Banking Stability Amid Crisis
Hinduja reassured investors that despite recent setbacks, IndusInd Bank remains fundamentally strong. He acknowledged awareness of the issue but clarified that, as a non-board member, he was not privy to the timing of the disclosure.
“The banking business involves lending and borrowing, and globally, banks face problems—often five or six times larger than this. Over the last 30 years, IndusInd Bank has encountered challenges but has always managed them effectively. This issue, too, will be resolved.”
Even with the financial setback, IndusInd Bank is still performing well, earning over ₹11,000 crore in operating profit over the last nine months. Hinduja reassured shareholders, urging them not to worry, as the issue is being handled and doesn’t indicate any serious problems with the bank’s management.
Transparency and Regulatory Concerns
The interview also touched upon issues of transparency and credibility, especially the timing of the revelation of the derivative loss. Investors were also perturbed by the Reserve Bank of India’s (RBI) move to provide only a one-year extension to the existing CEO, Sumant Kathpalia, rather than the three-year extension sought.
Hinduja acknowledged investor unease but emphasized the board’s integrity and the importance of long-term trust.
“Banking is built on integrity and faith. The concern over disclosure delays is understandable, but I believe the board and management acted with the best intentions.”
Promoter Commitment and Shareholding Expansion
One of the key topics was the promoters’ intent to increase their stake in the bank from 15% to 26%, pending RBI approval. Hinduja confirmed that all regulatory requirements had been fulfilled, and the promoters were awaiting final clearance.
“We received in-principle approval from the RBI. Once the final nod is given, we will inject the necessary capital to support the bank further.”
He also addressed concerns over pledged shares, clarifying that they are part of a broader financial strategy rather than an indicator of distress.
“IIHL is a holding company with over 600 shareholders. Our funding approach includes short-term pledging, which will be replaced in due course. The promoters’ commitment to the bank remains unwavering.”
CEO Succession Planning and Future Outlook
When questioned about succession planning, Hinduja refrained from speculating on Kathpalia’s long-term tenure, emphasizing that the board will evaluate performance and make decisions accordingly.
“The decision on leadership is the board’s prerogative. If the management performs well, they will be supported.”
After ₹18,000 crore of market capitalization evaporated with the recent slide, investors are carefully observing how IndusInd Bank gets through these uncertain times. Hinduja’s assurances of promoter support and financial strength bring a measure of comfort, but eyes are now firmly on regulatory nods and the ability of the bank to restore investor confidence.
Transparency Questioned?
IndusInd Bank is under pressure as investors question its governance and transparency. However, Hinduja’s strong support for the bank’s financial health and the promoters’ unwavering backing suggest a clear plan for long-term recovery.
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