Days after IndusInd Bank reported accounting discrepancies in its derivatives portfolio, leading to financial concerns, the Reserve Bank of India (RBI) has reassured that the private lender remains well-capitalized and financially stable.

The RBI has also directed IndusInd Bank to complete remedial actions by the end of March 2025, ensuring that all necessary disclosures are made to stakeholders.

RBI: IndusInd Bank Remains Strong Despite Discrepancies

In a statement issued on Saturday, the RBI highlighted the bank’s strong financial position, citing key financial indicators:

Capital Adequacy Ratio (CAR): 16.46% (well above regulatory requirements)
Provision Coverage Ratio (PCR): 70.20%
Liquidity Coverage Ratio (LCR): 113% (against the mandatory 100%)

The central bank also confirmed that IndusInd Bank has engaged an external audit team to conduct a thorough review of its systems and assess the full impact of the discrepancies.

Impact on IndusInd Bank’s Net Worth

According to experts, the derivatives accounting discrepancies could impact the bank’s net worth by ₹1,500-2,100 crore.
IndusInd Bank has estimated an adverse impact of approximately 2.35% on its net worth as of December 2024.

However, the RBI assured depositors that there is no need for panic, stating:

“There is no need for depositors to react to speculative reports at this juncture. The bank’s financial health remains stable and is being monitored closely by the RBI.”

What Is the Issue at IndusInd Bank?

Earlier this week, IndusInd Bank disclosed discrepancies in its derivatives portfolio related to forex hedging.

Timeline of Events

March 10, 2025: IndusInd Bank, in a regulatory filing, revealed that an internal review found accounting mismatches in its derivatives-related accounts.

Impact:

• The internal review was conducted following RBI’s September 2023 directive on the investment portfolios of banks.
• The discrepancies were found in ‘Other Asset and Other Liability’ accounts within the derivatives portfolio.

Potential Financial Hit:

• The impact could be as high as ₹2,100 crore, according to some reports.
• However, IndusInd Bank reassured stakeholders that its profitability and capital adequacy remain strong enough to absorb this one-time loss.

Next Steps: External Audit & RBI Monitoring

IndusInd Bank’s Board has been directed to complete corrective actions by Q4FY25 (ending March 2025).
An external audit is underway, with findings expected by the end of March 2025.
The RBI is closely monitoring the situation to ensure transparency and prevent further financial risks.

Leadership Changes at IndusInd Bank

The RBI has extended the term of IndusInd Bank’s current CEO for only one year, instead of the three-year extension sought by the bank.
The RBI has advised the bank’s board to seek external candidates for the roles of COO and CEO.

Stability Amid Scrutiny

While IndusInd Bank faces a short-term financial hit, the RBI’s reassurance and the bank’s strong capital and liquidity position indicate no immediate risk to depositors or investors.

Key Takeaway: The situation is under control, with regulatory oversight ensuring that corrective measures are in place before the end of the financial year.