IndusInd Bank to Layoff Underperformers

IndusInd Bank, one of India’s largest non-state-owned lenders, is preparing for a significant organizational restructuring aimed at boosting profitability and efficiency.

The overhaul, expected to be implemented within days, includes a clear directive to exit low-performing employees as the new management seeks to “clean up” the organization.

New Chief Executive Officer Rajiv Anand confirmed the move, stating the restructuring will lead to exits for underperforming staff but clarified that it will not constitute a large-scale layoff affecting the overall headcount of over 44,000 employees.

Rajiv described the bank as having accumulated “organizational cholesterol,” referring to the inefficiencies and legacy processes that have dragged down execution and profitability.

IndusInd Bank Addressing Governance and Profitability Crisis

The decision to streamline the workforce comes amid a turbulent period for the Hinduja family-backed lender.

The bank has faced intense scrutiny following a governance shakeup related to an accounting discrepancy concerning derivative trades. 

This discrepancy triggered the departure of its former CEO and other senior executives.

The financial fallout has been stark:

• The bank reported a net loss for the second quarter (Q2) and accelerated bad debt write-offs.
• The Return on Assets (ROA), a key metric of profitability, stood at -0.33% in the three months through September, significantly lower than its larger peers.

Rajiv has set an aggressive target of achieving a 1% Return on Assets within the next 18 months, calling it the first major milestone in the bank’s recovery.

The ongoing restructuring is viewed as a necessary step to achieve this target by enhancing efficiency and accountability.

Strategic Shift and Digital Focus

Beyond performance-based exits, the bank’s overhaul includes a significant strategic reorientation.

Rajiv confirmed plans to:

• Channel more resources into Artificial Intelligence (AI) to modernize operations.
• Expand its retail business into more predictable segments like home loans and lending to Micro, Small, and Medium Enterprises (MSMEs).
• De-risk the balance sheet by shifting away from its traditional focus on commercial vehicle loans and microfinance.

The bank has already begun strengthening its control functions, replacing several executives, including the Chief Financial Officer. 

It has also appointed a new internal auditor.

A new Chief Risk Officer is also set to join the organization by January.

This comprehensive clean-up covers both corporate governance and individual performance. 

It is designed to restore investor confidence and stabilize the bank’s long-term growth trajectory.

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