IndusInd Bank's Financial Integrity Under Scrutiny

Recent reports from brokerage houses suggest that IndusInd Bank may have overstated its net interest income in previous quarters. This revelation is expected to significantly impact the bank's profits for the fourth quarter as it seeks to address these discrepancies.

Internal Review Uncovers Derivative Portfolio Issues

During an internal review conducted in October 2024, IndusInd Bank discovered issues related to its foreign exchange derivative portfolio, specifically transactions from FY24 and earlier. The bank identified discrepancies in its hedging of foreign currency deposits and borrowings.

Regulatory Response and Future Steps

The Reserve Bank of India (RBI) has reassured the public of the bank's stability and urged depositors not to react to speculation. IndusInd Bank has been instructed to rectify these financial discrepancies by the end of the quarter ending March 31, 2025. An external assessment by PwC is underway to ensure the accuracy of the bank's financial statements.

Looking Ahead: Leadership and Investor Confidence

With the financial impact estimated at approximately 2.35% of the bank's net worth, to be absorbed as a one-time charge in 4QFY25, the focus now shifts to restoring investor confidence. The board is expediting the process of selecting a suitable successor to current leadership, aiming to address investor skepticism and strengthen the bank's credibility.