IndusInd Bank's liquidity adequate, capitalisation strong: Rating agencies

Losses in Q4FY25 unlikely to dent credit, liquidity profile; Tier-I impact estimated at 35 bps

IndusInd Bank’s liquidity position remains adequate, with comfortable capitalisation levels, according to Crisil Ratings and CARE Ratings. The domestic rating agencies made their observations on Wednesday in the wake of the bank’s revelations about inadequate internal controls in its accounting of derivatives transactions.

 

In an exchange filing on March 10, the bank said it had found discrepancies in the reporting of balances related to accounts within its derivatives portfolio. These discrepancies are expected to impact the bank’s net worth as of December 2024 by nearly 2.35 per cent, amounting to Rs 1,530 crore post tax.

 

Crisil Ratings said that at this juncture, IndusInd Bank’s pre-provisioning operating profitability and capital adequacy remains healthy enough to absorb the impact. Nevertheless, the final extent of discrepancies in the bank’s derivatives portfolio will be contingent on findings of an external agency, Crisil added.

 

 

The bank plans to recognise the impact of these discrepancies in Q4FY25, after receiving a final report from the external agency.

 

Agency CARE Ratings said the losses to be recognised in Q4FY25 are unlikely to significantly impact the bank’s credit and liquidity profiles. It added that it has taken note of the bank’s comfortable capitalisation level, with a capital adequacy ratio (CAR) of 16.46 per cent as of December 31, 2024.

 

The bank’s reported Tier-I CAR (nearly 15.2 per cent on December 31, 2024) will be impacted by around 35 basis points, according to Crisil Ratings’ estimates.

 

CARE Ratings noted the bank has maintained a liquidity coverage ratio (LCR) of 113 per cent as of March 9, 2025, and held unencumbered cash of Rs 30,000 crore as of March 11, 2025. Crisil said the LCR was adequate. The regulatory requirement for LCR is 100 per cent.

 

Crisil further noted that the bank has raised Rs 11,000 crore in funds through issuance of certificates of deposit to support its liquidity profile.

 

Both agencies said they have taken note of the Reserve Bank of India’s March 15 statement that the bank is well-capitalised and its financial position remains satisfactory and stable.