IndusInd Bank well-capitalized, depositors need not worry: RBI
MUMBAI: The Reserve Bank has said there is no need for the public to panic about their money with the troubled Indusind Bank, which on March 10 had disclosed that it would take a major hit on its bottom-line due to the many years of accumulated losses in its forex derivatives book.
The statement means that there is no run on the bank, according to the regulatory criteria.
“Indusind Bank is well-capitalised, and the financial position of the bank remains satisfactory. According to the auditor-reviewed financial results of the bank for the December 2024 quarter, the bank had a comfortable capital adequacy ratio of 16.46 and a provision coverage ratio of 70.20," the RBI said in a statement on Saturday.
"The liquidity coverage ratio was at 113 as of March 9, 2025, as against the regulatory requirement of 100,” the statement added.
The RBI statement comes amidst reports that depositors are withdrawing their money in large amounts from the bank as they fear a run on the bank.
It can be noted that Indusind was asked by the RBI to disclose its unaccounted losses, which the bank said would be 2.35% of its networth of Rs 64,000 crore as of December 2024, and which many analysts are counting upwards of Rs 2,000 crore as the book is yet to be cleaned up from the derivatives positions in its forex trading and forex deposit books.
Following the disclosure, the bank’s shares tanked 27% the next day. The bank shares are down more than 40% since March, which may see the stock exiting both the Sensex and Nifty soon.
Apart from the RBI probing its books, the chartered accountants body ICAI has also reportedly suo moto began to look into the books of the bank.
The regulator has also ordered all banks with large foreign exchange derivatives books and forex deposits to furnish details of their overall positions and also the hedged and unhedged positions as it does not want the problem to have any contagion effect on the system.
“The board and the management of the bank have been directed by Reserve Bank to have the remedial action completed fully during the current quarter, after making required disclosures to all stakeholders," the central bank said.
"As such, there is no need for depositors to react to the speculative reports at this juncture. The bank’s financial health remains stable and is being monitored closely by Reserve Bank,” the central bank added.
The statement also noted that based on the disclosures made available in public domain, the bank has already engaged an external audit team (PwC) to comprehensively review their current systems, and to assess and account for the actual impact of (not accounting for the year of accumulated losses from its forex derivatives book) expeditiously.