“The Reserve Bank would like to state that the bank is well-capitalised and the financial position of the bank remains satisfactory.” This statement by the Reserve Bank of India (RBI) was the latest in the saga of heightened scrutiny of India’s central bank on major lenders. All of it was triggered earlier this week, when IndusInd Bank posted an estimated ₹2,100 crore discrepancy in accounting, sending its shares on a freefall on Tuesday.
The accounting lapse, noted by the bank during the September-October period last year, was officially updated to the RBI last week. The central bank, in turn, told the lender that remedial action needed to be completed before the end of March.
By Monday, IndusInd filed with the stock exchange informing the markets about the “accounting discrepancy” while stating that it had enough reserves and the capital needed to tide over.
The lapses were in its derivatives portfolio, which could adversely impact the bank’s net worth by about 2.35 per cent, the lender noted. But the markets weren’t kind.
IndusInd bled on Tuesday, when its shares plunged 27.17 per cent to close at ₹655.95 per share after hitting a year-low of ₹649 apiece during the day.
The stock traded below ₹700 for the rest of the week, closing at ₹672.65 on Friday.
"There has been some speculation relating to IndusInd Bank Ltd. in certain quarters, perhaps arising from recent events related to the bank," said RBI in an official statement under Chief General Manager Puneet Pancholy.
"The Reserve Bank would like to state that the bank is well-capitalised and the financial position of the bank remains satisfactory,” the apex bank added, in a move to assure investors and lenders alike.
“As per auditor-reviewed financial results of the bank for the quarter ended December 31, 2024, the bank has maintained a comfortable Capital Adequacy Ratio of 16.46 per cent and Provision Coverage Ratio of 70.20 per cent. The Liquidity Coverage Ratio (LCR) of the bank was at 113 per cent as on March 9, 2025, as against regulatory requirement of 100 per cent,” RBI further stated.
This costly “accounting discrepancy” is expected to eat into IndusInd’s fourth-quarter profit to the tune of ₹1,500 crore, as per reports. Analysts estimate the discrepancy to be around ₹2,100 crore. IndusInd Bank CEO and MD Sumant Kathpalia, however, told investors that the “bank’s profitability and capital adequacy remain healthy to absorb this one-time impact.”
Kathpalia also delved into the nature of the lapse in Monday’s analyst call, stating that the derivative portfolio discrepancy was accumulated in the book over five to seven years, before April 1, 2024.
The Reserve Bank, on Saturday, also noted that IndusInd assigned an external audit team to “comprehensively review their current systems, and to assess and account for the actual impact expeditiously” as per the regulatory filings during the week.
The RBI further urged the board and management of IndusInd Bank to complete the remedial action in full during the current quarter (Q4 of FY2025), after making required disclosures to all stakeholders.
“As such, there is no need for depositors to react to the speculative reports at this juncture. The bank’s financial health remains stable and is being monitored closely by [the] Reserve Bank," the RBI further stated.
This event has led to the apex bank looking into the exposure of derivatives of certain private and state-run lenders, according to recent reports. This could mean that the RBI could ask banks in India to disclose details of overseas lending and deposits, including forex hedge positions.
