IndusInd Bank will pursue three strategic directions this financial year even as it plans revival after being hit by accounting lapses in its derivates portfolio and fraud in microfinance book.

Ramping up retail deposits, being selective in corporate lending space and scaling up secured retail and MSME (micro, small and medium enterprises) loans are the areas the bank will focus on in FY26, IndusInd Bank chairman Sunil Mehta said.

The strategies will be executed by driving synergies and adopting a unified ‘one bank’ approach.

The private lender will remain watchful on microfinance segment while continuing to pivot its rural distribution towards Bharat Banking, Mehta said. 

“Simultaneously, we are investing in scaling up existing and new initiatives such as home loans, affluent banking, digital 2.0, merchant acquiring, and micromarket-driven distribution,” he added.

The previous fiscal was a watershed year for IndusInd Bank and also a year of internal reckoning. “We faced certain challenges that required swift, transparent and decisive actions by the board and management. These events, while unfortunate, have catalysed a major transformation rooted in ethics, accountability, transparency and long-term sustainability," Mehta said.

The Hinduja family-promoted bank, impacted by alleged irregularities at the top management in recognising bad loans and trading reverses, reported a consolidated net loss of Rs 2,329 crore for the March quarter of FY25.

In March this year, the bank disclosed a Rs 1,979 crore accounting lapse in its derivative portfolio, followed by its internal audit review finding Rs 674 crore incorrectly recorded as interest from microfinance business, besides a Rs 595 crore "unsubstantiated balances" in "other assets" of the balance sheet.

"We have acted decisively to pursue higher standards of governance, transparency, and accountability. This governance culture will continue to be reinforced as we move forward," Mehta said in his message to shareholders in the bank's latest annual report.

The bank's balance sheet remains robust, supported by healthy capital adequacy, provision coverage and liquidity levels, he said, adding that these fundamentals provide a robust foundation for future growth.

The final shape of the bank’s path will, however, be taken by Rajiv Anand, who will take charge as the boss from 25 August. His experience in retail banking, amongst others, will come in handy to pull IndusInd Bank out of the mess.

Anand, who last served as Axis Bank deputy MD, has been appointed as MD and CEO of IndusInd Bank for a period of three years.

The post was lying vacant when Sumant Kathpalia resigned on 29 April as MD and CEO of the bank, weeks after the disclosure of accounting lapses.

"I sincerely acknowledge that the lapses, which occurred, are not what one expects from a Bank of our stature. The board and the management have undertaken a comprehensive deep dive into all issues brought to our attention, and they have been appropriately accounted for in the financial statements for FY25," Mehta said.

Stressing that the board and the management are fully committed to ensuring a smooth leadership transition, Mehta said, "Anand will have the opportunity to begin with a fresh and clean slate and will be expected to scale this differentiated franchise with a strong ethical foundation. I believe the Bank has immense potential to deliver sustainable and profitable growth for years to come".

The board is working closely with the management to instil a cultural shift that prioritises ethics, transparency, and long-term sustainability in all the actions we undertake, he added.