IndusInd International Holdings Ltd (IIHL), the promoter of IndusInd Bank, is ready to increase stake in the bank to up to 26 per cent, once it gets approval from the Reserve Bank of India (RBI), IIHL Chairman Ashok P Hindua told businessline. He talks about CEO succession at the bank, appointing IIHL nominees on the bank’s Board and the promoter’s intent to infuse further capital in the bank, subject to regulatory approval.
By when do you expect to get RBI nod to increase stake in IndusInd Bank to 26%?
There is a process. Private sector bank promoters can raise stake up to 26 per cent. Then there is form-A, which will have to be filled up and routed through the bank. After that, there may be queries, which we will respond to. Once these are satisfied, it is their prerogative on when to give an approval. After we receive the nod, we will be ready to raise capital from our shareholders.
We can go to secondary markets as well; or if the bank needs capital we will approach capital market. At the moment, there is no immediate requirement of funds at the bank. Even after the potential hit of ₹1,500 crore or ₹2,000 crore, their capital adequacy is more than 15 per cent, exceeding the minimum requirement is 12 per cent.
Will the promoter nudge IndusInd Bank to propose external CEO candidates’ names to the RBI?
If you have someone within the system, they can also be considered. But recommendations of the Board and the nomination and remuneration committee (NRC) have to be followed. Two-three names (of candidates) have to go, and based on the Board’s recommendation, the RBI will take a final call following their own assessment of the candidates.
Have you considered appointing IIHL nominees on the bank’s Board?
We have entered into an agreement with the bank as a promoter. We have to ask for 2-3 board directors. Once that is cleared and approved by the RBI, we will appoint. Now with the agreement in place with the bank, 2-3 representatives will go on the board.
Substantial investor value has been lost since the recent spate of adverse events. As a promoter, what is your message to shareholders?
Investors should not be panicking; they should not be worried. They should be concerned, yes, because of the credibility and their money lying in the institution. Will there be any problem? No. Because any bank which had failed had no promoter behind it. This bank has a solid promoter. In case of any problem, promoters are strongly behind the institution. So, shareholders and customers should not be worried. Moreover, the RBI has given a press statement which endorses what I am saying.
Are you comfortable with corporate governance at IndusInd Bank?
Whenever such types of issues arise, how can I say I am comfortable. I am not comfortable. Because any such thing happening over the last 5-7 years, nobody will be comfortable. Only after I get a report we will get to know whether or not it was a governance, or technical issue, or whether it was intentional. Because for so many years audits have taken place.
What are your global expansion plans?
We are open to exploring global opportunities. As I mentioned, IIHL’s shareholders are high net worth, they have funds, they are always looking for opportunities. If the Board recommends any such opportunity, definitely we will look at it; viability has to be there. There are many opportunities coming from Europe, Sri Lanka and Indonesia. But, unless our team of investment banking team is comfortable, we will not go ahead.
Published on March 18, 2025
