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IndusInd Bank expects its microfinance business to return to growth from Q2FY27

ICICIdirect Research 07 Sep 2026 DISCLAIMER

News: As per media sources, IndusInd Bank expects its microfinance business to return to growth from Q2FY27, with MD & CEO Rajiv Anand indicating that the difficult phase is behind and asset-quality trends are evolving favourably. Management expects the microfinance portfolio to grow ~15–20% in FY27, supported by a scale-up in disbursements and continued traction in Bharat Superstore, while overall advances are expected to grow broadly in line with the system at ~17–18%. On the upcoming ECL framework from April 2027, management estimates an impact of ~1–1.5% of assets and ~1% on CET1, which stood at 16.1% as of June 2026, and expects the existing capital position to be adequate to absorb the transition.

View: The expected revival in microfinance from Q2FY27 should support higher-yielding loan growth and aid the bank’s gradual recovery in margins and profitability, with management targeting 15–20% MFI growth for FY27. Improving MFI asset quality, with slippages and early delinquencies already declining materially, provides comfort on credit costs. Along with improving retail/vehicle finance momentum, this should support management’s trajectory towards ~1% exit RoA, though sustained asset-quality improvement and execution remain key monitorables. 

Impact: Positive

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