SETTING INDUSIND IN ORDER

THE RECENT UPHEAVAL AT INDUSIND BANK HAS RAISED RED FLAGS ABOUT THE ACCOUNTABILITY OF THE BOARD. A NEW CEO, TO BE PICKED SOON, WILL BE RACING AGAINST TIME TO RESTORE TRUST

- ANAND ADHIKARI

WHEN THE Reserve Bank of India (RBI) removed YES Bank founder, MD & CEO Rana Kapoor, Ravneet Gill took over as the CEO in March 2019. Unaware of the depth of the problem, Gill, a former Deutsche Bank executive, completely underestimated the stressed portfolio, with nonperforming assets (NPAs) exceeding estimates quarter after quarter. He failed to raise the much-needed capital.

Within a year, the RBI superseded the board and roped in State Bank of India, the country's largest bank, and some private banks to pump in additional capital. But six years later, this mid-sized private bank is yet to regain pre-crisis returns, with full recovery still years away.

Another old private sector bank, RBL Bank, faced a similar crisis in 2021 as CEO Vishwavir Ahuja, a Bank of America professional who turned around the small-sized bank, abruptly exited amid RBI intervention over rising NPAs. A new public sector CEO, R. Subramaniakumar, stabilised operations, but even after more than three years, shareholder returns are still below pre-crisis levels.

Much like YES Bank and RBL, private lender IndusInd Bank finds itself at a crossroads. Its troubles came to light on March 10, when the bank disclosed discrepancies in its derivatives portfolio. That caused a 2.35% erosion in its net worth.