Net Worth Impact Due to Derivative Account Discrepancies
The bank has identified discrepancies in its derivative accounts during an internal review, leading to an anticipated reduction in net worth by approximately 2.35%, equating to around ₹1,600 crore to ₹2,000 crore. These discrepancies pertain to internal derivative
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trades that were not in compliance with Reserve Bank of India regulations enforced since April 2024. To address this issue, IndusInd Bank has engaged an external agency to conduct an independent review and validate the internal findings
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Market Reaction
Following the disclosure of these discrepancies, IndusInd Bank shares witnessed a massive drop. On Monday, the stock declined nearly 4% and closed at ₹900.60, underperforming the BSE Sensex index, which fell 0.29% to 74,115.17. Trading volumes for
IndusInd Bank were significantly higher than the 50-day average, indicating increased activity in the market. On Tuesday, the shares continued to decline and hit a 52-week low of ₹765.40, a decline of 15%.
DIGI MARCH STORE PRINT ON DEMAND
Leadership Uncertainty
Apart from financial anomalies, the bank is also grappling with lack of information. The Reserve Bank of India has granted only a
one-year extension to CEO Sumant Kathpalia, a departure from the usual three-year term. This short tenure has raised concerns about leadership stability and the bank’s future strategic direction.
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Analysts suggest that the RBI’s decision may be linked to dissatisfaction with the bank’s progress on previously set conditions, particularly regarding the management of its microfinance portfolio, which has seen an increase in non-performing assets
Analyst Downgrades
In light of these developments, several brokerage firms have downgraded IndusInd Bank’s stock. Concerns about the derivative discrepancies and their potential impact on the bank’s financial health have led analysts to reassess their positions, reflecting a cautious outlook on the bank’s prospects
