The Reserve Bank of India (RBI) has granted a year’s extension to Sumant Kathpalia, managing director and chief executive officer of private lender IndusInd Bank.

The bank’s board had asked for a three-year extension for Kathpalia. 

This is the second consecutive time that the central bank has granted a shorter tenure for Kathpalia than the usual three-year extended term it gives when it approves the reappointment of a CEO. In his new tenure, Kathpalia will serve from 24 March this year to 23 March 2026.

The previous extension RBI approved for Kathpalia was for a period of two years. Kathpalia has been heading IndusInd Bank since March 2020. 

However, there have been instances where the RBI gave one-year extensions to bank CEOs, with the most notable cases being those of former Kotak Mahindra Bank CEO Uday Kotak, former Federal Bank CEO Shyam Srinivasan and former RBL Bank CEO Vishwavir Ahuja. 

There have been other instances when the RBI has declined to give a three-year extension to bank CEOs, with the most notable ones being those of former Kotak Mahindra chief Uday Kotak, former Federal Bank CEO Shyam Srinivasan and former RBL Bank CEO Vishwavir Ahuja.

A career banker with 37 years of experience, Kathpalia has been with IndusInd Bank for 17 years. He has also worked with global banks, including Citibank, Bank of America and ABN AMRO. 

IndusInd Bank reported a weak fiscal third-quarter performance due to increased stress from its microfinance segment, where the gross non-performing assets ratio is deteriorating. This impacted the bank’s profitability and net interest margins. 

Microfinance forms 9% of the bank's total loans and contributed to almost 32% of the slippages in Q3. In Q1FY25, microfinance was about 11% of the banks’ loan portfolio. 

Due to the stress overhang, the bank was looking to offload Rs 1,573 crore of non-performing microfinance retail loans.