Seeing start of credit appetite, especially in the flow to NBFCs: Romesh Sobti

IndusInd Bank chief executive Romesh Sobti has completed his last full quarter as the CEO of the bank. He retires in March after a12-year stint. In an interview with Joel Rebello, Sobti discussed succession planning, near-term performance, and the state of the economy. Edited excerpts:

What are the highlights this quarter?

Our interest engine is humming and, therefore, there is an improvement in our margins. Fee income is growing, and the big highlight is in higher operating profit, which at 3.83% is probably amongst the highest in the industry. Our gross and net NPAs are down (quarter on quarter). We have proactively recognised a few accounts that were lingering in terms of provisioning, like a travel industry account. Our microfinance book has grown 44% and vehicle and non-vehicle retail have also grown at 16% to 17%. Corporate book growth at 8% seems muted as a consequence of recoveries we got [in] this and the previous quarter. Growth in retail liabilities has been very strong at 48%.

Slippages have increased, something the market is not happy about.


One is the BAU (business as usual) slippages, which happen in the consumer bank and the vehicle finance side. Some slippages we have taken on account of a travel company. The net slippages have come at 42 basis points compared to 46 basis points last year. Accounts slipped but they were recovered, like the diversified NBFC we spoke about, which slipped but recovered. So, it passed through the NPA, but then recovered. Sequentially, they are up to 42 basis points from 35 basis points. What impacts the P&L is credit costs, and the outlook on credit costs is that net credit costs for nine months are at 59 basis points. We should have credit costs in the vicinity of 80 to 85 basis points this year compared to 1.44% last year.

What is your assessment of the macro-economy?

The situation boils down to demand growth. One of the factors is that the financial sector has to return to some degree of normalcy in terms of risk aversion. Some beginnings are visible. The growth of credit to the NBFC sector has gone up; it is no longer negative. That has a big impact on fuelling consumption demand. We are seeing the beginnings of credit appetite, especially in the flow of credit to the NBFC sector.

What is the update on succession planning at the bank?

There is a laid down timeline and we are well within it. We expect it to happen sooner rather than later. I will be there very much to handhold. It’s happening as we speak. Things are progressing as smooth as we expected them to. I will continue to be very strongly associated with the financial services sector because that is my beat.