RBI allows IndusInd CEO one year extension instead of usual three

Mumbai: IndusInd Bank has announced that the Reserve Bank of India (RBI) has approved a one-year extension for Sumant Kathpalia‘s as the bank’s chief executive officer (CEO). Kathpalia’s term, originally set to end on March 24, has now been extended until March 23 next year.

The bank’s board had earlier approved a three-year term for Kathpalia in September 2024. However, this is the second time that the RBI has approved a shorter tenure than what was proposed by the board. In March 2023, the RBI had approved a two-year term for Kathpalia instead of the three years initially recommended by the bank’s board. This decision does not align with the RBI’s typical practice of approving a three-year tenure for bank chiefs.

“Further to our letter dated September 27, 2024, we hereby inform that the Reserve Bank of India has conveyed its approval for re-appointment of Sumant Kathpalia as managing director & CEO of the bank for a further period of one year with effect from March 24, 2025 till March 23, 2026,” the exchange filing stated.Kathpalia was first appointed as the CEO of IndusInd Bank in 2020. During his tenure, the bank has faced challenges, particularly with increased stress in its microfinance portfolio. In the December quarter, the lender reported slippages of ₹2,200 crore, with ₹695 crore of that amount coming from the microfinance book.Kathpalia had addressed the situation by indicating that the incremental stress in the microfinance segment might be nearing its peak. He noted that the higher slippages in this segment were partly due to the broader challenges facing the microfinance industry at large. This suggests that while the bank has been facing some difficulties in this area, there may be a reduction in future stress as the situation stabilises. In his five-year stint with the private lender, IndusInd Bank has seen its stock price more than doubling from ₹398 per share to close to ₹936 apiece at the end of day’s trade Friday.

Kathpalia is a career banker with over 37 years of rich experience in large multinational banks such as Citibank, Bank of America and ABN AMRO prior to joining Indusind Bank. At IndusInd Bank, Kathpalia has been part of the core leadership team and joined the bank 17 years ago and has been pivotal in turning the bank around.