Kathpalia still remembers his first IndusInd office in Delhi’s Bhikaji Cama Place. A small room with 12 people with no desk and chair of their own. It was a different situation for the then career foreign banker. Now, with a swank office in Gurgaon’s DLF Cyber City, life has come a full circle.
“It was like an entrepreneurial drive to do something good. Office space did not matter,” he recalls. He was one of the four executives to accompany Sobti from ABN Amro in 2008 after stints in Citibank and Bank of America.
“The bank was a mess when we came. It had no consumer franchise. We focussed on the financials in the first three years, built scale in the next three and diversified our portfolio in the last three years. Each of our branch now earns Rs 1.3 crore per year as fees, among the highest in the industry,” Kathpalia said.
He had built ABN Amro’s retail loan book and has repeated that success at IndusInd. Loans for twowheelers, cars, commercial vehicles and equipment financing constituted 97% of the bank’s consumer book in 2008 making it vulnerable to the volatile nature of the vehicle financing business. It has now come down to 76%.
Kathpalia chose career over his first love –cricket– but has no regrets. “I still follow cricket passionately, but I love my job. The joy of accomplishing something and seeing the satisfaction and pride in the eyes of my family are unparalleled. We are leaving a legacy here that will be remembered for a long time,” he said.
Under Kathpalia, IndusInd started giving loans against property (LAP), a product which the bank did not offer before 2008. At Rs 6,429 crore, LAP is now the largest consumer loan portfolio for the bank, excluding vehicle loans.
“We are in a sweet spot, our distribution is maturing, our assets are diversifying. Growth will happen because demographics and macroeconomic trajectory is in our favour,” he said. His big move was to buy Deutsche Bank’s credit card business in India in 2011 which gave much needed diversification for the bank away from its vehicle financing business.
More than just a banker: Paul Abraham, Chief operating officer
Abraham is to Sobti what Ajit Jain is to Warren Buffett. He loves football as much as he loves banking.
He remembers the first year at IndusInd. “There was no capital, we urgently needed capital. There was one large corporate NPA which had to be chased down. And just when these things were getting addressed, Lehman happened and the whole market fell off the cliff.”
There was fear in the air between November 2008 and June 2009.
“Liquidity had dried up, disbursals had fallen. Vehicle finance was down to Rs 220 crore a month from Rs 500 crore. We had a structural problem because high tenure assets on vehicle finance side were funded by low tenure corporate funding. It was the biggest crisis any organisation could have faced,” Abraham said. IndusInd had to take some tough decisions to balance its books. It stopped vehicle loans and decided to grow corporate loans even at a discount. “Overall, it was a gamble. We were coming into an organisation which was shaky, but there was confidence because of our experience, composition of the team and our mutual trust,” he recalls.
Tough choices also included investing money in branches rather than in a new core banking system after raising Rs 222 crore through global depository receipts listed on the Luxembourg Stock Exchange in June 2008.
“All five of us used to go together to an investor, FII or mutual fund to tell our story so that nobody could have any doubt about the commitment of the team. We went public with our metrics every quarter. There were times when we fell behind, but we had to explain to the people that it’s not a competence issue,” Abraham said.
He is particularly proud of the bank’s achievement in reducing its cost-to-income ratio from 70%, when the team took over, to 47% now despite the bank’s branches increasing from just 180 at that point to more than 1,100 currently.
Outside the office, Abraham has interests ranging from football to environment and wildlife to artefacts. His most cherished project right now is building a museum in Bengaluru for young adults and children to showcase his collection of coins, artworks, maps, engravings and old books. He even learnt Urdu to decipher the engravings on some of his collections.
“This is a museum I am building in memory of my wife whom I lost to cancer in 2014. My wife was from Bengaluru, so I decided to have it there. I am still waiting for land, but I firmly believe everything happens with effort and focus,” he said.
Abraham is also a trustee of Sanctuary Asia magazine. He also provides a Rs 3 lakh grant every two years through the Tina Abraham-Sanctuary Initiative for Nature Action (TINA) also in memory of his wife. The grant is offered to three people involved with onground conservation projects across India. Currently, three grantees are working in Kaziranga (Assam), Sundarbans (West Bengal) and near Nagpur in Maharashtra.
“I was always interested in wildlife and my wife was also a passionate wildlife conservationist. But wildlife is not only in villages. There are a lot of birds and creatures we can see in the city.’’
An avid footballer, Abraham played for Gujarat and also at Bombay Gymkhana.
Abraham, who owns a patch of coffee plantation, wants to make Coorg his retirement home.
The risk killer: KS Sridhar, Head, Risk Management
Whether the sun comes out on time or not, KS Sridhar is at the gymnasium at 6 am because, that is one thing he does not want to miss everyday.
“I am a workout maniac. Every day, I am up at 5 am and in the gym by 6. I am there till 7:30. This has become a habit and if I don’t go, I feel something has gone wrong or I am not in proper shape. Gym is totally into me,” he says.
While daily gym has kept him physically fit, Sridhar has ensured that IndusInd is also in the best of shapes. With gross nonperforming loans at 0.94%, the bank has probably one of the lowest bad loan ratios, making it a preferred choice for investors keen to ride the Indian growth story without its bumpiness.
In the last eight years, IndusInd’s loan book has increased to Rs 1.02 lakh crore from Rs 13,268 crore. However, its gross NPAs have reduced from 3.22% to 0.94% in this period.
Sridhar attributes this success to the risk department being involved in the loan process right from the inception of the loan product. “When we joined there was no separate risk function in the bank. We brought in a distinction between risk and business by creating separate units. Risk is involved right from the beginning in our bank. We decide the road map and contours of loans,” Sridhar said.
The veto to either approve or reject a loan is given to the risk department, and not even Sobti dares him. “If the risk-reward equation is skewed, then we won’t sign the contract and then there is no point in marketing the loans,” he said. Just like his colleagues, Sridhar also moved from the erstwhile ABN Amro where he was in charge of risk management. However, the challenges at IndusInd were different because this sleepy private sector lender had struggled to break into the big banking league in India despite being around for more than a decade.
Growth was a priority, but unfettered growth could have sounded the death knell for the bank. It is no surprise then that Sobti chose a trusted lieutenant to keep an eye on this extremely sensitive function.
Sridhar is particularly proud of the fact that IndusInd’s credit costs have consistently been in the 50 to 60 basis points range, down from 100 basis points before the new management took over. “That was my performance objective as CRO and it was not just a flash in the pan. Also at that time, we were growing at 30% or so,” he said.
In these nine years, the bank has avoided large slippages on loans mainly because of some hard calls the risk department took. Sridhar particularly recalls the bank’s call not to finance any infrastructure-linked project.
“Project finance at one point of time was really the flavour with mega power projects and infrastructure projects promoted by big corporate names. Various people said these things can’t go wrong and we should do it. But we took a contrarian view at that time and waited. We ended up financing not even one of those projects. We were proved right.’’
Building relationships: Suhail Chander, Head, Corporate and Commercial Banking
It was not a straight forward decision for Suhail Chander to take up a career with IndusInd Bank. It was a dilemma any middle-aged working man or woman faces – family or career?
His family was based in Singapore and he didn’t want to disturb the education of his children and also a quiet life that included playing the saxophone and hitting a shuttle to take off the pressure.
So, in the first few years of his stint, Chander kept frequenting between Singapore and Mumbai. But the choice he made seems to have paid off.
“The bank’s performance has been better than any of my expectations. Just the fact that we have come from having none of the 15-20 top corporate names to now when there is no top name without a relationship with us says a lot,” Chander said.
As head of corporate and commercial banking, Chander is in charge of banking with both the largest as well as the smallest companies giving him a great overview of the macro economy. Under his watch, IndusInd’s corporate and commercial banking loan book has increased to Rs 59,905 crore, or 58% of the bank’s loan book, compared to Rs 5,619 crore, or around 45% of the loan book, when the new team took over.
Chander said making a change in the employee culture was crucial.
“We always underestimate the effort to bring a cultural change in the organisation. You have to get people to work in a different way and making that transition was a big deal for us. Once that happened, growth was smooth,” he said.
Before coming to IndusInd, Chander spent 17 years at ABN Amro as head of corporate and commercial banking for Singapore and Malaysia. He also spent seven years between 1999 and 2006 in Indonesia which gave him a varied exposure in the South Asian market. This stint also introduced him to badminton, a sport he loves.
Chander spends at least three days a week hitting the shuttle at Bombay Gymkhana. “Badminton is competitive, it forces you to forget everything. If you are playing badminton, you can’t think of what is going to happen to your numbers tomorrow,” he says.
Chander also plays the saxophone which helps him “take a forced rest” from his professional routine. “Our world is all consuming, when you work in a job like this, you create pressure. You have to keep your brain occupied. I also read many murder mysteries and legal thrillers because you can’t think of anything else when you are reading it, and when you put it away, you never need to think about it because it’s not deep philosophy,” Chander said.