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Shares of IndusInd Bank surged by as much as 5.19% in opening deals; What investors should know
IndusInd Bank is grappling with a potential Rs 1,600-2,000 crore hit to its net worth.
IndusInd Bank Share Price: Shares of IndusInd Bank surged by as much as 5.19%, reaching Rs 707 per share on the BSE during the opening trade on Monday, March 17, following a reassuring statement from the Reserve Bank of India (RBI). The RBI addressed speculation surrounding the bank, affirming that it remains “well-capitalised” and its “financial position remains satisfactory.”
According to the RBI, IndusInd Bank reported a Capital Adequacy Ratio of 16.46% and a Provision Coverage Ratio of 70.2% for the quarter ending December 31, 2024. Additionally, the bank maintained a Liquidity Coverage Ratio (LCR) of 113% as of March 9, 2025, well above the regulatory requirement of 100%.
The RBI’s official statement highlighted: “As per the auditor-reviewed financial results for the quarter ending December 31, 2024, the bank has maintained a comfortable Capital Adequacy Ratio of 16.46% and a Provision Coverage Ratio of 70.20%. The Liquidity Coverage Ratio (LCR) of the bank stood at 113% as of March 9, 2025, exceeding the regulatory requirement of 100%.”
IndusInd Bank’s shares took a significant hit last week after the private-sector lender revealed an accounting discrepancy, which was estimated to have impacted 2.35% of its net worth. Analysts have pegged the discrepancy at Rs 2,100 crore in absolute terms.
In the past five sessions, the bank’s shares have plunged by 26%.
What Is The Issue at IndusInd Bank?
Earlier this week, IndusInd Bank revealed accounting discrepancies in its derivatives portfolio related to forex hedging.
In a regulatory filing on March 10, the bank informed that an internal review of processes concerning its derivatives portfolio had uncovered discrepancies in the account balances.
The Mumbai-based bank’s detailed internal review estimated an adverse impact of approximately 2.35% on the bank’s net worth as of December 2024, which could amount to Rs 2,100 crore.
The review was initiated following the Reserve Bank of India’s (RBI) directions issued in September 2023 regarding the investment portfolios of lenders, specifically related to the ‘Other Asset and Other Liability’ accounts within these portfolios.
In response to the disclosure, IndusInd Bank held an analyst call and stated that an external auditor is reviewing the matter, with a report expected by the end of March 2024.
However, the bank clarified that its profitability and capital adequacy remain healthy enough to absorb this one-time impact.
Additionally, the Reserve Bank of India (RBI) recently extended the current CEO’s term by only one year, instead of the three years requested by the bank. According to an Economic Times report, the RBI has also directed the bank’s board to search for external candidates for the roles of COO and CEO.
