As against the requested tenure extension of 3 years, RBI has only granted a one year extension to Sumant Kathpalia as MD & CEO of IndusInd Bank.
- Bank had sent the request to RBI in September 2024 for 3 years.
- RBI has given the approval for one year from March 24, 2025 till March 23, 2026.
- This is the second time RBI has approved his extension by a shorter term than the one sought. In 2023, the regulator had only cleared a two-year term for him.
- Kathpalia, a reputed career banker, has been serving on the post since March 24, 2020.
His shorter extension seems to be because of RBI’s continued concerns related to bank’s exposure to microfinance. For the quarter ended December, the bank’s MFI book was Rs 32,564 crore, forming 9% of it’s total loan assets.
Additionally, the new findings in the bank’s derivative portfolio could have also raised a red flag in the regulator’s mind. IndusInd Bank found accounting discrepancies in it’s derivatives portfolio, which has had an impact of 2.35% on the bank’s net worth as of December 2024.
On the approval for the shorter tenure, Kathpalia commented that the RBI is “not comfortable with my leadership skills” of running IndusInd Bank Ltd.