Shares of IndusInd Bank climbed 5 per cent in Monday's trade after the Reserve Bank of India (RBI) said the private lender's financial health remained stable and was being monitored closely. There is no need for depositors to react to the speculative reports at this juncture, the apex bank said in a release on March 15.
Following the development, the stock rose 5.19 per cent to hit a high of Rs 707 on BSE. Despite this, the scrip is still down 27 per cent year-to-date against a 6 per cent drop for the BSE Sensex during the same period.
The RBI comments came as IndusInd Bank declared a preliminary impact of 2.4 per cent of its net worth due to a change in the valuation of derivatives transactions, leading to a flurry of downgrades on the stock. Analysts said an adjustment would be required, which would even lead to losses for the private lender in the March quarter.
The Bank's Managing Director and Chief Executive Officer Sumant Kathpalia, however, insisted that IndusInd Bank will earn a profit in the fourth quarter as well as the financial year despite the impact of the derivatives discrepancy. He expressed confidence in the bank’s capital adequacy which is above 15 per cent.
"Basis the disclosures available in public domain, the bank has already engaged an external audit team to comprehensively review their current systems, and to assess and account for the actual impact expeditiously. The Board and the management have been directed by Reserve Bank to have the remedial action completed fully during the current quarter viz., Q4FY25, after making required disclosures to all stakeholders," RBI said in a statement on IndusInd Bank.
It said IndusInd Bank is well-capitalised and the financial position of the bank remains satisfactory. The bank had maintained a comfortable Capital Adequacy Ratio of 16.46 per cent and Provision Coverage Ratio of 70.20 per cent, as per auditor-reviewed financial results of the bank for the quarter ended December 31, 2024.
The liquidity coverage ratio (LCR) of the lender stood at 113 per cent as on March 9 compared with the regulatory requirement of 100 per cent.