IndusInd Bank Moves to Boost Liquidity After Derivatives Loss
Mumbai: Days after reporting significant derivatives losses and accounting discrepancies, IndusInd Bank has raised ₹11,000 crore by selling certificates of deposits (CDs), an Economic Times report confirmed on Tuesday. The move is aimed at strengthening liquidity reserves and rebuilding investor confidence after the bank’s stock price suffered a steep 27% decline last week.
The liquidity infusion comes shortly after the Reserve Bank of India (RBI) reassured markets that IndusInd Bank maintains a satisfactory capital position, despite concerns arising from its financial disclosures.
IndusInd Bank’s ₹11,000 Crore Fundraising: Key Details
- The bank has issued certificates of deposits with maturities ranging from three months to one year.
- As per Clearing Corporation of India (CCIL) data, the CDs were priced between 7.80% and 7.90%, reflecting a higher borrowing cost compared to other lenders.
- The elevated interest rates indicate that the bank is paying a premium to attract institutional investors and shore up short-term liquidity.
Derivatives Loss & Accounting Issues Spark Concerns
The latest liquidity move follows a turbulent period for IndusInd Bank, which came under scrutiny after internal audits revealed discrepancies in its derivatives portfolio.
- March 10, 2025: The bank disclosed that irregularities had been identified in account balances related to derivatives transactions.
- Following this revelation, IndusInd Bank’s stock plummeted 27%, triggering market-wide concerns over the bank’s risk exposure.
Regulatory Intervention & Leadership Changes
Amid heightened regulatory oversight, the RBI has asked IndusInd Bank to nominate external candidates for its CEO and COO positions.
- The current CEO’s tenure was extended by only one year, despite the bank’s request for a three-year term extension.
- The central bank’s directive signals a push for leadership changes to restore investor confidence and strengthen governance.
IndusInd Bank’s Liquidity Strategy: A Turning Point?
Market analysts believe that the ₹11,000 crore fundraising will provide short-term liquidity relief, but challenges remain:
- Higher borrowing costs: The elevated CD rates (7.80%-7.90%) suggest that creditors see increased risk in lending to the bank.
- Regulatory pressure: The RBI’s cautious stance on leadership appointments indicates that the bank may face continued regulatory scrutiny.
- Investor sentiment: The bank needs to restore market confidence by addressing derivatives exposure and risk management policies.
