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Informist, Wednesday, Jul. 22, 2026

By Vaishali Tyagi and Priyasmita Dutta

NEW DELHI – IndusInd Bank is targeting foreign currency non-resident deposits through Gujarat International Finance Tec-City and partner banks, and is confident of raising deposits in line with its market share, the mangement of private sector lender said in an analyst call post its earnings on Wednesday. 

"We are looking at all three streams — retail FCNR(B) deposits, leverage through our GIFT City, and leveraging partner banks," the bank's management said. "All three segments is something that we are targeting. Our market share on the NRI (Non-Resident Indian) side is higher than our natural market share, and we are fairly confident that we will raise at least as much as our natural market share is."

After the Reserve Bank of India launched the scheme, Indian banks and certain foreign lenders have increased interest rates on dollar deposits under the FCNR(B) scheme. The RBI's swap window allows lenders to price these deposits on a par with domestic liabilities. Several Indian and foreign banks have hiked rates by over 300 basis points in some cases. In June, the regulator did away with caps on offering deposit rates, which was seen as a push to maximise inflows.

On Jun. 12, IndusInd Bank had raised interest rates on dollar-denominated foreign currency non-resident bank deposits by 290-315 basis points to 6.60-6.75% for three- to five-year tenors. At the same time, it cut the rates offered for sub-two-year deposits across sizes. 

The private-sector lender released its earnings post market hours. IndusInd Bank reported a net profit of INR 10.03 billion for the June quarter, up 46.5% on year and significantly higher than the Street' estimate of INR 6.90 billion. Sequentially, the bottom line almost doubled from INR 5.33 billion in the March quarter. Wednesday, shares of the bank ended at INR 1,069.30 on the National Stock Exchange, up nearly 1% from Tuesday. 

On profitability, the bank's management said it reached an inflection point in quarter ended June and was well positioned to improve profitability in coming quarters. The lender has entered a new phase with a focus on sustainable and risk-adjusted growth.

"Q1 (Apr-Jun) marked a clear inflection...we have now entered the next phase of our journey, focused on accelerating sustainable risk and creating stronger operating foundations," Rajiv Anand, managing director and chief executive officer, IndusInd Bank, said. "The progress made across deposits, asset quality, profitability and capital position gives us confidence that the bank is well-positioned to deliver stronger growth, improving profitability in the coming quarters."

On asset quality, the bank expects improvement in the Oct-Mar period. "...growth momentum was achieved without compromising portfolio quality and provides an annualised net slippage improved further," Anand said. "There is no concern on asset quality side, other than the two portfolios that we have been consistently calling out, which is on the two-wheeler side and tractor. Otherwise, we don't see any concern."

Gross non performing assets were at 3.25% of gross advances as of Jun. 30, down from 3.43% as on Mar. 31. Net non-performing assets were 0.95% of net advances at the end of June, compared with 1.00% at March end. The provision coverage ratio was at 71.42% at the end of June.

Further, the bank's managamet said that the lender was building an artificial intelligence-powered operating model and sees AI as a key competitive differentiator. "Our focus is on embedding AI deeply into customer engagement, credit decisioning, risk management and employee productivity enabling superior customer outcomes, faster decision making and improved operating efficiency at scale," the bank's top management said. 

The bank continues to scale AI adoption, with over 12,000 employees already trained in AI. Its AI-powered knowledge management platform, Indus Compass, has more than 15,000 monthly active users and delivers over 55,000 responses every month. The enterprise AI chat platform has 12,200 monthly active users and generates around 875,000 interactions each month.

IndusInd Bank said it remains firmly focused on achieving its immediate target of 1% return on assets, supported by improving business momentum, lower credit costs, and continued operating leverage. The bank's RoA was at 0.78% in the quarter ended June.

The managing director said the bank will continue to focus on secured products such as gold loans and mortgage-based loans. "Over the medium term, our strategy is to scale secured lending including mortgages and gold loans, while growing unsecured portfolios through analytics-driven customer acquisition, deeper engagement and cross-sell," Anand said. The bank's advances were at INR 3.26 trillion as of Jun. 30, down 2% on year and up 3% on quarter. 

The bank also believes that this approach will drive sustainable, granular, risk-adjusted growth across the franchise. Small and medium enterprises banking is one of the most significant medium-term growth opportunities for the bank and could be a key contributor to the bank's growth strategy going forward, the management added. 

Of the total loan book, 50% was in the retail segment, which fell 4% year-on-year to INR 1.63 trillion at the end of the June quarter. Small and medium enterprises loans accounted for 13% of the book and declined 5% on year to INR 432.95 billion. The remaining 37% was in the wholesale segment, which rose marginally on year to INR 1.20 trillion. 

The bank's management said more work is needed on the deposit side, both in terms of quantity and quality. "The work on improving both quality and quantity has begun," it said. The bank also expects meaningful growth in the microfinance portfolio. "Both microfinance and commercial vehicles, Q1 (Apr-Jun) typically is seasonally weak...and even in that situation, if you look at dispersals on the microfinance side, have actually been flat. And so, therefore, you should see a meaningful acceleration on the microfinance business really from Q2 (Jul-Sept) onwards," the top management of the lender said. The management said the bank now views microfinance as a rural business and it also expects a decline in the wholesale business over the next two to three years.

The bank's management guided that lender will slow down on personal loans and credit cards as bank will work to correct portfolio quality and take several risk actions. "We are now seeing the tail end of that risk that is flowing in and will slowly take our growth back and start getting the risk cost much more in control," the managment said. 

On other income, the bank said there is ample scope to increase locker fees and insurance distribution fees. "Similarly, there is significant opportunity on the distribution side, both in insurance and mutual funds," the management said. It added that growth in cards and retail assets was stuck for last 18 months. "As credit card growth picks up, fee income will start kicking in. Retail asset disbursements have also started this quarter, which will bring in processing fees. So there are plenty of opportunities for us to grow fees," the management said.

When asked about impact on from the transition towards the Reserve Bank of India's new expected credit loss framework, the management said the estimated one-time impact remains at 1.0% to 1.5% of loans and we continue to maintain that. The RBI's new framework requires banks to provide for expected future credit losses rather than wait for loans to turn non-performing. The expected credit loss framework will come into effect from Apr. 1, 2027.

The bank'a management said its ambition is to first grow in line with the systemic growth in 2026-27 (Apr-Mar) and then grow faster than the market. The bank believes that there are ample opportunities that are available in the marketplace at this point, across mid-corporate, large corporate, and small corporate segments.  End

Edited by Akul Nishant Akhoury

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