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The RBI directs IndusInd Bank to have the remedial action completed fully during the current quarter (Q4FY25), and says ‘there is no need for depositors to react to the speculative reports at this juncture’.
IndusInd Bank earlier this week disclosed accounting discrepancies in its derivates portfolio related to forex hedging, which could affect its net worth by Rs 1,500 crore.
Days after IndusInd Bank reported discrepancies in its derivatives accounting leading to financial losses, the Reserve Bank of India (RBI) on Saturday said the private sector lender is well-capitalised and its financial position remains satisfactory. It also directed IndusInd Bank to have the remedial action completed fully by the end of this month.
The RBI in a statement said, “As per auditor-reviewed financial results of the bank for the quarter ended December 31, 2024, IndusInd Bank has maintained a comfortable capital adequacy ratio of 16.46 per cent and a 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.”
On the derivatives accounting discrepancies, the RBI said that “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”.
According to experts, this could potentially impact IndusInd Bank’s net worth by Rs 1,500 crore. Some reports peg it at Rs 2,100 crore.
It said the RBI has directed IndusInd Bank’s board and the management to have the remedial action completed fully during the current quarter viz., Q4FY25, after making required disclosures to all stakeholders.
“As such, 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,” the central bank said.
What Is The Issue At IndusInd Bank?
Earlier this week, IndusInd Bank disclosed accounting discrepancies in its derivates portfolio related to forex hedging.
In a regulatory filing on March 10, IndusInd Bank informed that during an internal review of processes relating to the derivatives portfolio, it noted some discrepancies in the account balances.
Mumbai-based IndusInd Bank’s detailed internal review has estimated an adverse impact of approximately 2.35 per cent of bank’s net worth as of December 2024, the company said in a statement.
The review was undertaken following RBI’s directions on investment portfolio of lenders, issued in September 2023, relating to ‘Other Asset and Other Liability’ accounts of the portfolio.
This could potentially impact IndusInd Bank’s net worth by as much as Rs 2,100 crore.
Following this disclosure, IndusInd Bank held an analyst call and said that an external auditor is reviewing the matter, with a report expected by the end of March 2024.
However, IndusInd Bank clarified that the profitability and capital adequacy remains healthy to absorb this one-time impact.
Earlier, the Reserve Bank of India (RBI) extended the incumbent CEO’s term by just one year against three years that was sought by the private sector lender. According to an Economic Times report, the RBI told the bank’s board to look for external candidates for the post of COO and CEO.
