IndusInd Bank Dismisses Reports of Microfinance Pause and Executive Exit

IndusInd Bank has denied reports that it has stopped onboarding new customers in its microfinance (MFI) segment. In an official statement, the bank clarified that it has not received any directive from the Reserve Bank of India (RBI) to pause MFI customer acquisition.’

As of 9:27 am on April 25, 2025, IndusInd Bank share price was trading at ₹820.80, up 0.13% for the day, with a 28.84% gain over the past month and a 21.20% decline over the past six months.

Reports of Pause Since January

Earlier media reports had suggested that the bank stopped adding new MFI customers in January 2025 and paused loan disbursements through its microfinance arm, Bharat Financial Inclusion Ltd (BFIL), for most of the March quarter. These reports claimed that the decision was based on informal feedback from the RBI.

Executive Exit Denied

IndusInd Bank also rejected claims that Vikas Muttoo, COO and head of member services at BFIL, had left the organisation in connection with the developments. Muttoo was heading the MFI vertical, which accounted for 9% of IndusInd Bank’s total loan book in the first nine months of FY25.

Audit Underway at BFIL

The bank has engaged global audit firm EY to examine operations at BFIL. The scope of the review includes accounting of interest income reversals, expense entries, and loan pricing. The possibility of evergreening practices is also under review. The audit began following feedback from the RBI, and a preliminary report may be submitted before June.

Loan Book Under Review

As of December 2024, IndusInd Bank’s MFI loan book stood at ₹32,564 crore. Of this, ₹6,679 crore has been recognised as non-performing assets for the nine months ended December 2024. Disbursements during the same period stood at ₹4,614 crore. Depending on audit findings, a one-time provision may be required.

Plans on Hold

Plans to reposition BFIL as an affordable lending business under the name ‘Bharat Banking’ have been put on hold. The RBI has asked the bank to complete the audit, address operational gaps, and make necessary provisions before implementing the new structure.

Read more: IndusInd Bank Forensic Audit Over ₹600 Crore Discrepancy

Conclusion

IndusInd Bank has denied halting MFI operations or any senior-level exits. An internal review is in progress, and further developments are expected once the audit concludes.

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