RBI Affirms IndusInd Bank’s Stability Amid Market Concerns

Regulator Confirms Strong Capital Position and Liquidity Ratios

The Reserve Bank of India (RBI) has issued an official statement reassuring investors and stakeholders about IndusInd Bank Ltd’s financial health, emphasizing that the bank remains well-capitalized with a satisfactory financial position. The central bank’s remarks come in response to recent market concerns surrounding discrepancies in IndusInd Bank’s derivatives portfolio, which raised questions about its financial stability.

Key Financial Metrics Indicate Stability

According to RBI’s latest assessment, IndusInd Bank reported strong capital buffers and liquidity ratios for the quarter ending December 31, 2024:

• Capital Adequacy Ratio (CAR): 16.46%, well above the regulatory requirement.
• Provision Coverage Ratio (PCR): 70.20%, indicating a robust safety net against bad loans.
• Liquidity Coverage Ratio (LCR): 113% as of March 9, 2025, exceeding the mandatory 100% requirement.

The RBI noted that these figures, derived from auditor-reviewed financial results, underscore IndusInd Bank’s sound financial standing despite recent concerns.

Derivative Portfolio Discrepancies and RBI’s Oversight

The statement from India’s central bank follows IndusInd Bank’s recent disclosure of discrepancies in its derivatives portfolio, which could impact 2.35% of the bank’s net worth as of December 2024. The bank acknowledged the issue during an internal portfolio review and immediately initiated corrective actions.

RBI Directs IndusInd Bank to Implement Corrective Measures

To ensure transparency and prompt resolution, the RBI has mandated the bank to engage an external audit team for a comprehensive review of its systems and financial disclosures. The bank’s Board and management have been instructed to:

• Complete all remedial actions within Q4 FY25.
• Make necessary disclosures to all stakeholders regarding the impact of the discrepancies.

“The Board and the management have been directed by the Reserve Bank to have the remedial action completed fully during the current quarter, after making required disclosures to all stakeholders,” the RBI statement read.

Leadership Changes: RBI Urges IndusInd Bank to Seek External CEO and COO Candidates

In a further regulatory intervention, the RBI has advised IndusInd Bank’s Board to consider external candidates for the positions of Chief Executive Officer (CEO) and Chief Operating Officer (COO). This move signals the regulator’s proactive approach in ensuring governance and stability at the bank following recent challenges.