Indusind Bank’s Financial Position Remains Satisfactory, Assures RBI Amid Concerns
Updated: March 15, 2025, 8:08 AM
MUMBAI: In a recent statement, the Reserve Bank of India (RBI) has sought to reassure the public about the financial stability of Indusind Bank, following disclosure of significant losses related to its foreign exchange derivatives. The RBI’s comments come as some depositors have expressed concern, leading to increased withdrawals from the bank.
On March 10, Indusind Bank revealed it would face a considerable hit to its profits due to accumulated losses from its forex derivatives book, estimated at 2.35% of its net worth of ₹64,000 crore as of December 2024. This disclosure has raised alarm among investors and customers alike, resulting in a sharp decline in the bank’s stock, which plummeted by 27% following the announcement. As of now, Indusind Bank shares have fallen more than 40% since the start of March, prompting speculation about a potential exit from the Sensex and Nifty indices.
RBI’s Reassurance
In light of the growing concerns, the RBI emphasized in its statement that there is no need for depositors to panic. The central bank highlighted that Indusind Bank is “well-capitalised,” with a capital adequacy ratio of 16.46% and a provision coverage ratio of 70.20%, according to the audited financial results for the December 2024 quarter. Furthermore, the bank’s liquidity coverage ratio stood at 113% as of March 9, 2025, comfortably above the regulatory requirement of 100%.
The RBI indicated that these figures reflect a robust financial position, suggesting that the risk of a run on the bank is low. “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 Reserve Bank,” the statement read.
Regulatory Actions and Ongoing Monitoring
In response to the situation, the RBI has mandated that Indusind Bank fully disclose its unaccounted losses and has directed the bank’s management to implement necessary remedial actions within the current quarter. The central bank also stated that it is closely monitoring the bank’s activities to ensure stability in the financial system.
In addition to the RBI’s oversight, the Institute of Chartered Accountants of India (ICAI) has initiated its own examination of the bank’s accounts, following the revelations about its forex derivatives positions. The RBI has also called on all banks with substantial foreign exchange derivatives holdings to provide comprehensive details regarding their hedged and unhedged positions to prevent any broader market contagion.
Steps Forward
To address the ongoing concerns, Indusind Bank has engaged the services of an external audit team from PwC to carry out a detailed review of its current systems and the impact of the undisclosed losses from its forex derivatives dealings. This initiative aims to ensure that all stakeholders are informed and to help restore confidence among depositors and investors alike.
As the situation develops, stakeholders and customers of Indusind Bank remain attentive to the bank’s financial disclosures and the RBI’s regulatory measures. The central bank’s reassurances indicate a commitment to ensuring the solvency and stability of the banking sector, particularly in times of financial uncertainty.
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