IndusInd Bank expects its microfinance business to return to growth from the second quarter of FY27 after working through operational and governance issues. Managing Director and CEO Rajiv Anand said the bank has increased disbursements and is seeing better risk trends across the business.
The lender expects its microfinance portfolio to grow between 15% and 20% during FY27. Meanwhile, overall asset growth could remain close to the wider market rate of about 17% to 18%.
Rajiv Anand said the difficult period for IndusInd Bank’s microfinance operations has passed. The bank now expects growth to resume from Q2 as lending activity increases.
“We have had a fairly difficult time on our microfinance business. But it is all now behind us. Risk is playing out quite well at this point in time and Q2 onwards we should see growth come back in our microfinance businesses,” Anand said in an interview with PTI.
The bank has also increased disbursements after slowing activity during the earlier period. Anand said this gives the lender confidence that the portfolio can start expanding again.
IndusInd Bank also operates Bharat Superstore through its microfinance and rural banking business. The unit provides loans to kirana shops, small restaurants and other small businesses. Anand said the business continues to perform well.
“So, the entire microfinance and rural banking business that we have should show strong growth as we move into the second quarter and beyond,” he said.
IndusInd Bank expects its microfinance portfolio to expand by 15% to 20% during the current financial year. The forecast comes as the lender rebuilds growth following problems linked to Bharat Financial Inclusion Ltd, or BFIL.
In 2025, the bank faced governance and accounting issues connected to its microfinance subsidiary. IndusInd Bank later reversed Rs. 674 crore of cumulative interest income that had been incorrectly recognised during FY25.
The lender also disclosed another Rs. 172 crore as fraud after employees incorrectly recorded the amount as fee income in the microfinance business.
“We needed to scale up our disbursements, which has now happened, and we are very confident that we should see growth from here,” Anand said.
For the wider bank, Anand expects asset growth to remain close to the broader market. He said the market is currently growing at around 17% to 18%, and IndusInd Bank expects to remain near that range.
IndusInd Bank is also preparing for the Expected Credit Loss, or ECL, framework scheduled to take effect from April 1, 2027. Anand estimated that the bank may require provisions equal to around 1% to 1.5% of assets under the new framework.
“We would require around 1-1.5 per cent of assets. At least, that's our first estimate. Our net worth is more than adequate to absorb the impact,” Anand said.
The bank expects the change to reduce its Common Equity Tier 1 ratio by about one percentage point. Its CET1 ratio stood at about 16.1% at the end of June 2026.
Meanwhile, IndusInd Bank reported consolidated profit after tax of Rs. 1,037.05 crore for the quarter ended June 30, 2026. That marked a 72% increase from Rs. 604.07 crore reported in the same period a year earlier.
The Q1 earnings came as the bank worked to stabilise its microfinance operations, increase lending activity and prepare for renewed portfolio growth from the second quarter.
Also Read: IndusInd Bank Swings Back to Profit in Q4 FY26 With Rs. 594 Crore Earnings