The Reserve Bank of India (RBI) on Saturday dismissed market speculation surrounding IndusInd Bank Ltd, assuring depositors that the bank remains financially stable and well-capitalized. This clarification comes amid concerns triggered by recent developments related to the bank’s internal review of accounts.
RBI’s Assurance on Financial Stability
The RBI emphasized that there is no need for depositors to react to speculative reports, stating that IndusInd Bank’s financial health remains stable and is under close monitoring.
“As per auditor-reviewed financial results of the bank for the quarter ended December 31, 2024, the bank has maintained a Capital Adequacy Ratio (CAR) of 16.46% and a Provision Coverage Ratio (PCR) of 70.20%. The Liquidity Coverage Ratio (LCR) of the bank stood at 113% as of March 9, 2025, comfortably surpassing the 100% regulatory requirement,” the RBI stated in a press release.
IndusInd Bank’s Response and External Audit
IndusInd Bank has already engaged an external audit team to assess its internal systems and account for any financial impact. The RBI has directed the bank’s board and management to complete all necessary remedial actions within Q4FY25, ensuring full transparency to stakeholders.
“The board and the management have been directed by RBI to have the remedial action completed fully during the current quarter (Q4FY25), after making required disclosures to all stakeholders,” the RBI added.
Derivatives Portfolio Discrepancy & Financial Impact
Earlier this week, IndusInd Bank informed stock exchanges that an internal review of its derivatives portfolio had identified some discrepancies, which are expected to have a 2.35% impact on the bank’s net worth as of December 2024.
The bank further stated:
- A detailed internal review has been conducted.
- An external agency has been appointed to independently verify and validate the findings.
- A final report from the external agency is awaited, and any resultant impact on financial statements will be considered accordingly.
Despite this one-time impact, IndusInd Bank maintained that its profitability and capital adequacy remain strong.
RBI’s Track Record in Safeguarding Depositors
The RBI reassured depositors that IndusInd Bank’s situation is not a crisis, but rather an isolated accounting discrepancy. The central bank has a strong track record of safeguarding depositor interests, having intervened in past financial challenges such as:
- YES Bank (2020)
- RBL Bank (2021)
- Global Trust Bank collapse (2004)
- PMC Bank crisis (2019)
Unlike these previous cases, IndusInd Bank’s financial data confirms stability, with no systemic risk.
Leadership and RBI’s Oversight
Previously, the RBI granted Sumant Kathpalia, the MD & CEO of IndusInd Bank, a one-year extension, despite the board recommending a three-year tenure. Kathpalia suggested that the derivatives portfolio discrepancy might have played a role in this decision.
“There was some inkling of the issue. I don’t know the rationale behind them giving me a one-year extension, but I think they are uncomfortable with my leadership skills in running the bank, and we have to respect that,” Kathpalia stated during an analyst call.
No Cause for Panic: RBI’s Final Word
The RBI reiterated that IndusInd Bank remains stable, urging depositors not to panic. The bank’s key financial indicators remain strong, and corrective actions are already underway to address the identified issues.
By ensuring transparency and closely monitoring developments, the RBI aims to maintain depositor confidence while reinforcing IndusInd Bank’s position as a well-capitalized and stable financial institution.
