IndusInd Bank’s shares hit a 52-week low on Monday at the Bombay Stock Exchange, dropping 3.86 per cent to ₹900.60, after the RBI approved only a one-year reappointment for managing director and CEO Sumant Kathpalia instead of the requested three years.
The bank had sought an extension from March 24, 2025, to March 23, 2028, but the RBI approved just a one-year term until March 23, 2026. Analysts see this as prolonging uncertainty over leadership succession, though it allows time to address regulatory concerns.
“A one-year term will keep uncertainties lingering around the potential leadership transition at the bank. This also gives the bank adequate time to regain normalcy in operations, work on management succession, and address the gaps with the regulator in a planned manner,” Motilal Oswal said in a report.
IndusInd Bank has struggled in recent quarters due to slowing loan growth, asset quality stress and weak margins.
Motilal Oswal said the bank has seen a 36 basis point NIM (net interest margin) compression over the past year, with a 15 bps decline in Q3FY25.
Near-term margins are expected to stay weak due to high slippages and a lower share of high-yielding microfinance loans. The RBI’s potential rate cuts may further impact lending yields.
However, with most of its book being fixed-rate and greater MCLR linkage in floating-rate loans, the bank is expected to see stable or improving margins from H2FY26.
