Promoters will infuse capital into IndusInd Bank if needed: Ashok Hinduja

Bank is currently well-capitalised; awaiting RBI clearance for stake raise from 15% to 26%

Promoters stand ready to inject capital into IndusInd Bank if necessary, said Ashok Hinduja, chairman of IndusInd International Holdings Ltd (IIHL), said on Tuesday.

 

However, with the bank’s capital adequacy at comfortable levels, he stressed, there is no immediate requirement for fresh funds, nor has the bank sought additional capital.

 

IIHL, which currently holds a 15 per cent stake in IndusInd Bank, has been awaiting regulatory clearance to raise its stake to 26 per cent.

 

Hinduja said this is “an opportune time” for promoters to increase their stake, as the bank’s shares have taken a hit following last week’s disclosure of discrepancies in its derivatives portfolio, which could dent the bank’s net worth by more than 2 per cent. 

 

 

The credibility of the bank, he noted, will depend on the findings of an external audit by PwC, which has been engaged to review the derivatives portfolio.

 

“Once the report comes, it will go to the board. They will review (the report) -- they have their various committees. And then they will take a call on who is the person responsible for the past so many years — whether it was one person, two persons, or whether it was an error,” Hinduja said. 

 

IIHL has received in-principle approval from the Reserve Bank of India (RBI) to increase its stake in IndusInd Bank but is still awaiting final regulatory clearance. “All communication responses have been given to the regulator. It is now left to the regulator as to when and how it will give us (the clearance),” Hinduja. 

 

Hinduja also confirmed that IIHL’s acquisition of Reliance Capital has been completed, with the final tranche of funds transferred to the Committee of Creditors. 

 

The National Company Law Tribunal (NCLT) approved IIHL’s resolution plan for Reliance Capital — once an Anil Ambani company — in February 2024. The acquisition gives IIHL control over 42 entities, including key subsidiaries Reliance Nippon Life Insurance, Reliance General Insurance, Reliance Securities, and Reliance Asset Reconstruction.

 

The total acquisition cost stands at ₹9,861 crore, financed through ₹7,300 crore in debt from Barclays and 360 ONE, along with ₹2,750 crore in equity. Additionally, IIHL has infused ₹200 crore into Reliance General Insurance as capital.

 

The debt, which has a maturity of 42 months, is expected to be retired early, with IIHL planning to list key businesses such as Reliance General Insurance and Reliance Nippon Life Insurance within two years. The firm anticipates a valuation of around ₹20,000 crore.

 

“The company will look for the listing of Reliance Nippon Life Insurance Company and Reliance General Insurance in the next 2 years”, Hinduja said. Promoter holding in the company will remain unchanged until the listings, he noted. 

 

IIHL, which also holds a stake in IndusInd Bank and is in the process of acquiring Invesco Asset Management and Invesco Trustee, is targeting a $50 billion valuation for its BFSI ventures by 2030. Currently valued at $15 billion, IIHL is a Mauritius-based investment holding firm with interests in banking and financial assets.