IndusInd Bank shares rebound after RBI reassurance

Indusind Bank rose 3.41% to Rs 695.05 after the Reserve Bank of India (RBI) reassured the private lender's financial stability.

The RBI's statement, addressing recent market concern, affirmed that IndusInd Bank is "well-capitalised" and maintains a "satisfactory" financial position.

The central bank highlighted key financial metrics, citing the bank's auditor-reviewed results for the quarter ended December 31, 2024. These results revealed a Capital Adequacy Ratio (CAR) of 16.46% and a Provision Coverage Ratio (PCR) of 70.20%. Further, the bank's Liquidity Coverage Ratio (LCR) stood at 113% as of 9 March 2025, comfortably exceeding the regulatory requirement of 100%.

The RBI also addressed the speculation directly, emphasizing that there is "no need for depositors to react to the speculative reports at this juncture." The statement confirmed that IndusInd Bank has engaged an external audit team to conduct a comprehensive review of its current systems, aiming to assess and account for any potential impact expeditiously. The RBI has directed the bank's board and management to complete the remedial actions within the current quarter (Q4FY25) and to make necessary disclosures to all stakeholders.

The RBI's intervention and clarification have effectively quelled market concerns, leading to the positive market reaction and a boost in investor confidence.

The central bank reassured that IndusInd Bank's financial health remains stable and is being closely monitored.

This positive market reaction followed a period of concern triggered by IndusInd Bank's disclosure of discrepancies in its derivative portfolio, identified during an internal review prompted by the RBI's new Master Direction on investment portfolios. The bank estimates a potential adverse impact of approximately 2.35% of its net worth as of December 2024, reportedly amounting to Rs 1,600 crore. The bank plans to absorb this impact in its Q4 FY25 or Q1 FY26 earnings.

Following the bank's disclosure on 10 March 2025, the IndusInd stock crashed 27.16% in a single day on 11 March 2025.

To ensure transparency, IndusInd Bank has engaged an independent external agency for review and validation of its internal findings. The bank has emphasized that its profitability and capital adequacy remain robust enough to absorb this one-time impact.

IndusInd Bank caters to both consumer and corporate customers. As of 31 December 2024, the banks distribution network included 3,063 branches/banking outlets and 2,993 onsite and offsite ATMs, as against 2,728 branches/banking outlets and 2,939 onsite and offsite ATMs as of 31 December 2023. The client base stood at 42 million as on 31 December 2024.

The private lender's standalone net profit tumbled 39.01% to Rs 1,401.28 crore while total income grew by 8.46% to Rs 15,151.01 crore in Q3 December 2024 over Q3 December 2023.

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