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IndusInd Bank, established in 1994 by Mr. Srichand P Hinduja along with members of the Indian diaspora, today is one of the fastest-growing banks in India.
Currently, IndusInd Bank, a large-cap listed on the NSE and BSE, will soon be a new entrant in the Indian mutual fund industry via a new wholly-owned subsidiary.
The Reserve Bank of India (RBI) has given its nod to the bank to enter the mutual fund business via its subsidiary.
“This is to inform that the Reserve Bank of India, has accorded its approval to the bank for setting up a wholly owned subsidiary to undertake asset management business of mutual fund along with infusing equity capital in the said asset management subsidiary,” read the approval letter dated August 19, 2024.
Moreover, the approval letter outlines certain conditions the bank must meet so as to move ahead in setting up an Asset Management Company (AMC) through the wholly owned subsidiary.
Pursuantly, the bank on the same date, as a part of its Disclosure under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, also filed this information with the stock exchange.
After this development, the stock of IndusInd Bank has moved up over Rs 1,370 apiece.
It should be noted that IndusInd International Holdings (IIHL), a Mauritius-based investment holding company with investments in banking & financial services firms, has a 12.48% stake (holding 8,95,37,464 shares) in IndusInd Bank as of June 30, 2024.
Earlier in March this year, IIHL picked up a 60% stake in Invesco Asset Management Company. Invesco retained a 40% stake in the joint venture and both, Invesco and IIHL, have sponsor status.
Following the accord from the RBI, the wholly owned subsidiary of the IndusInd Bank would soon move the capital market regulator, the Securities and Exchange Board of India (SEBI) with an application to launch the mutual funds business.
SEBI shall review the application and communicate accordingly thereafter. The total time for registration with SEBI shall depend on how fast the requirements are complied with by the applicant.
Meanwhile, for the quarter ended June 2024, IndusInd Bank has reported a Profit After Tax (PAT) of Rs 2,171 crore, an increase of 2.3% over the June quarter last year. The Net Interest Income (NII) grew from 4,867 crore to 5,408 crore, an 11% growth year-on-year (y-o-y).
The Net Interest Margin (NIM) of the bank has been steady at around 4% since the last year. The Gross Non-Performing Asset (GNPAs) and Net Non-Performing Assets (NNPAs) of the bank, however, have gone up to 2.0% to 0.6%, respectively year-on-year, from 1.9% and 0.6% earlier due to higher provisioning for bad loans.
Similarly, the CRAR of the bank is at 17.5% as of June 30, 2024, lower than 18.4% on June 30, 2023. That said, the CRAR of the bank is healthy.
The entry wholly-owned subsidiary of IndusInd Bank would harden the competition in the Indian mutual fund industry, leaving investors with a plethora of choices.
That said, investors need to go with schemes from mutual fund houses that follow robust investment processes and systems plus invest sensibly in the interest of their financial well-being. A thoughtful approach paves the path for wealth creation.
Happy Investing!