Mumbai (Maharashtra) [India], March 15 : Amid the ongoing crisis in the IndusInd bank, the Reserve Bank of India (RBI) on Saturday released a statement stating that the bank is well capitalised and financially stable.
The RBI said, "The Reserve Bank would like to state that the bank is well-capitalised and the financial position of the bank remains satisfactory."
The apex bank further added in the statement that as per auditor-reviewed financial results of the bank for the quarter ended December 31, 2024, the bank has maintained a comfortable Capital Adequacy Ratio of 16.46 per cent and Provision Coverage Ratio of 70.20 per cent.
According to the RBI, the Liquidity Coverage Ratio (LCR) of the IndusInd bank was at 113 per cent as on March 9, 2025, as against regulatory requirement of 100 per cent.
"Basis the disclosures available in public domain, the bank has already engaged an external audit team to comprehensively review their current systems, and to assess and account for the actual impact expeditiously," the RBI added.
The RBI said that the board and the management of the IndusInd Bank Limited have been directed by Reserve Bank to have the remedial action completed fully during the current quarter viz., Q4FY25, after making required disclosures to all stakeholders.
"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 RBI said.
IndusInd Bank in an exchange filing pointed out some discrepancies which were observed during internal review of processes relating to Other Asset and Other Liability accounts of the derivative portfolio, post implementation of RBI Master Direction - Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023 issued in September 2023, including accounting of Derivatives, applicable from April 01, 2024.
The bank undertook internal trades which had low liquidity and were on swap basis where 3-5 yr yen deposits were to be swapped for 8-10 yr dollars for a multilateral.
These trades were hedged where the hedges were marked to market but the internal swaps were on cost accounting basis and not mark to marketed. This resulted in discrepancies.
The bank has also appointed an external agency to independently review and validate the internal findings. The review is likely to be completed by fourth quarter itself.
Earlier this month, the IndusInd Bank's CEO Sumant Kathpalia, received RBI approval for tenure extension by 1 year vs expectation for 3 years. On 18-Jan-2025, the CFO had tendered his resignation to pursue other professional opportunities.
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