Informist, Saturday, Mar. 15, 2025

--RBI: Directed IndusInd Bank to complete remedial action in Jan-Mar

--RBI: IndusInd Bank well capitalised, financial position satisfactory

--RBI: No need for depositors to react to speculative reports on IndusInd Bk

--RBI: IndusInd Bank's financial health stable, being monitored closely

NEW DELHI – The Reserve Bank of India has called IndusInd Bank's financial health stable and satifactory, days after the bank said it found inconsistencies in derivate portfolio accounts, which would hurt its net worth by around 2.4%. The central bank called on the depositors not to react to "speculative reports" at this juncture, adding that it was monitoring IndusInd Bank's financial position closely.

The bank's share price has declined over 25% since Monday, when it first announced the discrepancies in its derivative portfolio accounts. On Friday, shares of the bank ended 1.8% lower at INR 672.35 on the National Stock Exchange.

"The Reserve Bank would like to state that the bank is well-capitalised and the financial position of the bank remains satisfactory," the central bank said in a statement on Saturday. The RBI has directed the board and the management of IndusInd Bank to have the remedial action completed fully during the current quarter ending March.

The discrepancies were related to internal positions taken to hedge forex deposits or borrowings, the bank said post market hours Monday in an analyst call. The adverse impact amounted to about INR 15.30 billion. The bank had then appointed an external agency to independently review and validate the internal findings.

IndusInd Bank's net profit for Oct-Dec had declined 39% on year to INR 14.01 billion. For the nine months ended December, the net profit fell 26% on year to INR 49.04 billion. The Basel-III capital adequacy ratio of the bank was at 16.46% as of Dec. 31. The tier-1 capital adequacy ratio of the bank was at 15.18%, and the tier-2 capital adequacy ratio was at 1.28% as on Dec. 31.

The bank observed the discrepencies by September and October, said Sumant Kathpalia, the bank's managing director, in an analyst call after disclosing them. The hedging instruments were used by the balance sheet management desk, which is also the asset-liability management desk of the bank and it emanated on account of the foreign currency deposits and the borrowings in foreign currency, Arun Khurana, deputy chief executive officer, had said.

"We have hired the external agency to start reviewing our business and that is why we are comfortable that by March end or April early we should be able to identify the gap and it seems to be in line with what we are saying but we want to be very sure about it right now because it's still not validated completely," Kathpalia had said in the analyst call on Monday.

After the bank made discrepencies public, its stock price slumped 28%, the steepest decline its stock since its listing in 1998. After the stock price of IndusInd Bank slumped, the National Stock Exchange of India added the bank to its short-term additional surveillance framework, it said in a circular issued Wednesday. Under the exchange's short-term additional surveillance mechanism, all open positions in shares of IndusInd Bank in the cash market on the NSE at the end of Thursday's trading session will attract a minimum 50% margin.

On Monday, the bank's stock price on the NSE ended at INR 900.50. The bank disclosed the discrepencies after market hours on Monday. On Thursday, the stock price ended at INR 672.35 on the NSE. End

Reported by Shubham Rana and Sourabh Kumar

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.