The promoters of crisis-hit IndusInd Bank have assured investors and depositors that they remain committed to supporting the bank if there is a need for more equity infusion.
“Though the Capital Adequacy of the bank is quite healthy, for business growth, should any further equity be required, IIHL, as the promoter of IndusInd Bank, remains committed to supporting the Bank, as it has done over the past 30 years,” said Ashok P Hinduja, chairman, IndusInd International Holdings Limited, promoter of the bank.
IndusInd Bank reported a net loss of Rs 2,329 crore in the fourth quarter due to higher provisions to account for the derivative losses. This is the first time in 19 years the bank has reported quarterly losses.
The bank, however, maintains its balance sheet remains healthy after absorbing the impact of the derivative losses as its Capital Adequacy Ratio stood at 16.24%, Provision Coverage Ratio at 70% and average liquidity coverage ratio (LCR) of 118% with excess liquidity of Rs 39,600 crore. Net worth of the bank at Rs 62,532 crore in Q4FY25 was higher than Rs 61,445 crore in Q4FY24.
Hinduja says he has his continued, unequivocal trust in the chairman and Board of Directors of the bank for their appropriate, swift actions in order to address discrepancies and attendant areas of concern.
“The coordinated efforts of current management under the guidance and monitoring of the Board and other stakeholders have ensured that the bank’s business remains healthy, with robust capital adequacy,” said Ashok Hinduja in a statement issued on Thursday.
Earlier in March, the bank disclosed Rs 1,979-crore losses due to discrepancies relating to derivatives accounting. Internal audits of the bank further revealed an amount of Rs 674 crore was incorrectly recorded as interest in its micro finance business over three quarters of FY25. Further, the bank’s internal audit team has stumbled upon ‘unsubstantiated balances aggregating to Rs 595 crores in Other Assets accounts of the Bank’.
These accounting ‘errors’ led to the ouster of MD and CEO Sumant Kathpalia and whole-time director & deputy CEO Arun Khurana.
Meanwhile, the bank management in an analysts call disclosed that a review by the bank of the microfinance account has also identified misclassification of certain microfinance loans has resulted in under-provisioning and non-recognition of NPAs aggregating to Rs1,885 Crore.
According to the board of the bank, the RBI has advised the bank to submit proposals for appointment of the new CEO for RBI’s approval by 30 June 2025. “The Board is at an advanced stage in the selection process and is confident that recommendations will be submitted to the RBI in advance of the timeline,” the management said in the analyst call.