The latest on IndusInd Bank derivative discrepancy issue- The Reserve Bank of India has come out with a statement and stated that “there is no need for depositors to react to the speculative reports at this juncture. The bank’s financial health remains stable and is being monitored closely by Reserve Bank.”
RBI On IndusInd Bank: Capital adequacy comfortable
The Bank was in the eye of the storm recently after accounting discrepancy on forex hedges came to light. The hit as a result is estimated to be Rs 1500 crore in Q4 earnings or almost 2.34% of its net worth. However the Reserve Bank of India has issued a statement clarifying, “As per auditor-reviewed financial results of the bank for the quarter ended December 31, 2024, the bank has maintained a comfortable Capital Adequacy Ratio of 16.46 per cent and Provision Coverage Ratio of 70.20 per cent. The Liquidity Coverage Ratio (LCR) of the bank was at 113 per cent as on March 9, 2025, as against regulatory requirement of 100 per cent.”
Recently, a key brokerage house CLSA also maintained Outperform rating on the IndusInd Bank on the basis of its fundamentals. As reported by FinancialExpress.com earlier, “its fundamentals will take over. If IndusInd Bank delivers numbers broadly in line with expectations over the next 4-6 quarters, we believe concerns will subside.” They see 30% upside in IndusInd Bank share price. The share has seen significant correction in past 4-5 sessions.
RBI directs IndusInd Bank to complete remedial action by Q4FY25
There has been some speculation relating to IndusInd Bank in certain quarters, perhaps arising from recent events related to the bank. The Reserve Bank assured depositors, “that the bank is well-capitalised and the financial position of the bank remains satisfactory. Basis the disclosures available in public domain, the bank has already engaged an external audit team to comprehensively review their current systems, and to assess and account for the actual impact expeditiously. The Board and the management have been directed by Reserve Bank to have the remedial action completed fully during the current quarter, Q4FY25, after making required disclosures to all stakeholders.”
The Central Bank has a strong track record in protecting depositors interest as seen in some recent instances of financial stress in the banking sector including Yes Bank in 2020 and RBL Bank the very next year in 2021.