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BW Businessworld

Ramesh Sobti: The Master Banker

He has turned around IndusInd Bank into a consistent profit-making entity


The master banker, Ramesh Sobti, has turned IndusInd Bank into the fifth-largest private bank in the country (by market capitalisation), with assets of over Rs 1.78 lakh crore and net profit of Rs 2,867.9 crore.

When Sobti joined IndusInd Bank in 2008, the Bank’s market cap was a mere Rs 6,000 crore. Since then, in the last 10 years the exceptional growth that the bank has been clocking has seen its market value soar 19 times. It’s for this leadership expertise that Ramesh Sobti, Managing Director, IndusInd Bank stands tall in BW Businessworld’s Most Valuable CEO list.

Sobti has made strategic forays and acquisitions over the years to enhance or increase the bank’s operations in new business segments. In October 2017, he strategically led IndusInd Bank to acquire Bharat Financial Inclusion, a micro-finance lender, in a move that should re-define rural banking. The bank will aim to bridge the gap in financial inclusion, which would also help boost its CASA ratio in the long run. For the bank, this is a strategic fit: it would lower the cost of funds, give access to priority lending space, reduce risk weights and broaden its customer base.

With this move, IndusInd Bank’s customer base will have increased to 16.3 million, with a loan book of Rs 1.26 lakh crore, and assets of more than Rs 2 lakh crore.

In FY 2017, despite a tough operating environment the bank’s net profit increased 25.4 percent over the previous year, to Rs 2,867.9 crore, while its net income improved 34.23 percent to Rs 6,062 crore. Yet, despite a tough stressed environment in the economy, IndusInd Bank has one of the lowest non-performing loans in the banking sector. Its net NPAs were 0.39 percent, compared to 0.36 percent a year ago.

The Bank enjoys a good net interest margin, of around 4 percent over the years thanks to a judicious mix of lower borrowing costs and better yields on loans. Retail loans, which are generally higher yielding assets, it has maintained at about 46 percent of its loan book.

Besides, Sobti has diversified the loan book to cover a wide array of segments such as commercial-vehicle loans, two-wheeler loans, car loans, credit cards, tractor financing, loan against property, and so on. This helps de-risk the lending side against a slowdown in any one segment.

Besides, the Bank has been steadily expanding its operations in the Indian market, spreading its network to about 1,200 branches and more than 2,000 ATMs, highly beneficial in raising CASA. With its former 180 branches, its CASA (current and savings accounts) constituted 15 percent. Today, CASA comprises 44 percent of its funds.

Digitalisation has been the key in the last few years. Sobti has increased technology-based services to reach more and more customers. “Our digital push during the past year continued unabated. We intensified our online banking efforts and improved our services. We continued to innovate launching a new and convenient and secure service called ‘Fingerprint Banking’, which allows customers to conduct end-to-end transactions via the IndusMobile banking app with just their fingerprints,” notes Sobti in the bank’s annual report.

IndusInd Bank continues to add customers. For instance, it added one million loan accounts in consumer finance. Under Sobti’s leadership, the bank continues to make progress, both organically and through inorganic strategic acquisitions and new areas and businesses. With its differentiated innovations, IndusInd Bank is one of the few banks to have made rapid progress over the years. All kudos to Sobti!

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