IndusInd Bank Shares Surge 3% as RBI Confirms Strong Capital Position

RBI’s Assurance Boosts Investor Confidence Amid Derivatives Concerns

Shares of IndusInd Bank Ltd. surged over 3% on March 17, following a statement from the Reserve Bank of India (RBI) that reassured investors about the bank’s strong capital position despite concerns surrounding discrepancies in its derivatives portfolio.

The RBI emphasized that IndusInd Bank remains “well-capitalized” and financially stable, even as the lender faces scrutiny over its risk management processes. The stock had fallen by 35% over the past month, but RBI’s clarification helped ease investor anxiety, leading to a sharp recovery in share prices.

IndusInd Bank’s Financial Strength: Key Ratios and Regulatory Compliance

According to RBI’s official statement, IndusInd Bank reported strong financial ratios as of December 31, 2024, and March 9, 2025:

• Capital Adequacy Ratio (CAR): 16.46% (above the regulatory requirement)
• Provision Coverage Ratio (PCR): 70.2%
• Liquidity Coverage Ratio (LCR): 113% (exceeding the 100% minimum requirement)

At 9:25 AM, IndusInd Bank shares were trading at ₹691.85, reflecting a 2.9% increase from the previous session’s closing price.

RBI’s statement aimed to dispel concerns triggered by an internal review of IndusInd Bank’s derivatives portfolio, where certain accounting discrepancies were identified.

Derivatives Portfolio Review: RBI Mandates Corrective Measures

The issues stem from an internal assessment of derivative exposures, which led IndusInd Bank to estimate an adverse impact of 2.35% on its net worth due to discrepancies.

On March 10, 2025, the bank disclosed that it was working on corrective measures under RBI’s directive. The central bank instructed IndusInd Bank’s Board and management to fully resolve these discrepancies within Q4 FY25 and ensure all necessary stakeholder disclosures.

According to a source familiar with the matter, the potential impact on profits could be around ₹1,500 crore.

• IndusInd Bank’s CEO and MD, Sumant Kathpalia, stated in an analyst call that the bank may not be able to use general reserves to offset the loss and will likely have to record the impact in the Profit & Loss (P&L) statement.

Market Reaction

• Investor sentiment improved after RBI’s assurance, leading to a rebound in IndusInd Bank’s stock price.
• The bank’s financial stability metrics remain strong, but investors will closely watch Q4 FY25 earnings for any additional disclosures.
• Foreign institutional investors (FIIs) and domestic mutual funds will likely reassess their IndusInd Bank holdings based on how effectively it addresses the derivatives portfolio issue.

Despite the short-term challenges, IndusInd Bank’s compliance with regulatory capital norms and RBI’s support may help restore confidence and stabilize stock performance in the coming months.