Posted on March 17, 2025, by Niftynews
IndusInd Bank shares surged by 3.41% on March 17, 2025, rising to ₹695.05 after the Reserve Bank of India (RBI) issued a reassuring statement about the bank’s financial health. This positive movement came as the RBI addressed recent market concerns, confirming that IndusInd Bank remains financially stable.
The RBI’s statement effectively quelled fears triggered by speculation regarding the bank’s capital adequacy and liquidity, thereby restoring investor confidence and driving the stock price higher.
RBI Reassures Investors of IndusInd Bank Financial Health
The RBI’s intervention came after concerns were raised about discrepancies in IndusInd Bank’s derivative portfolio, which were identified during an internal review. The central bank confirmed that the bank is “well-capitalised” and maintains a “satisfactory” financial position. Key financial metrics, including a Capital Adequacy Ratio (CAR) of 16.46%, Provision Coverage Ratio (PCR) of 70.20%, and Liquidity Coverage Ratio (LCR) of 113% as of March 9, 2025, highlighted the bank’s robust financial standing, well above the regulatory requirements.
The RBI also reassured the public that there was no immediate cause for concern, urging depositors to ignore speculative reports. The statement emphasized that IndusInd Bank is taking proactive steps, including engaging an external audit team for a thorough review of its systems. Additionally, the RBI directed the bank’s management and board to take necessary remedial actions and provide transparency within Q4 FY25.
How the Rebound Affects IndusInd Bank’s Stock
After the RBI’s statement, IndusInd Bank shares rose sharply, recovering from the massive decline it faced on March 11, 2025. On that day, the stock plummeted by 27.16% following the disclosure of discrepancies in the bank’s derivative portfolio. This decline was driven by market concerns over the potential financial impact, which the bank estimated at approximately ₹1,600 crore or 2.35% of its net worth as of December 2024.
The surge in IndusInd Bank’s stock on March 17 was a direct result of the RBI’s reassurance, which clarified that the bank is in a solid financial position to manage any one-time impacts without affecting its long-term stability. Investors responded positively to the reassurance, reversing the previous losses and restoring confidence in the stock.
Financial Performance and Outlook for IndusInd Bank
Despite the recent challenges, IndusInd Bank remains a strong contender in the Indian banking sector. The bank reported a 39.01% decline in net profit for Q3 FY24, falling to ₹1,401.28 crore, compared to the same period in the previous year. However, the bank’s total income grew by 8.46%, reaching ₹15,151.01 crore in Q3 December 2024, signaling resilience despite the recent setbacks.
The Capital Adequacy Ratio and Liquidity Coverage Ratio reaffirm that IndusInd Bank is well-capitalised and capable of absorbing shocks. Moreover, the bank continues to expand its distribution network, with 3,063 branches and 2,993 ATMs across the country, supporting its ability to maintain and grow its market presence.
Steps Taken by IndusInd Bank to Address the Issue
In response to the discrepancies, IndusInd Bank has engaged an external audit team to conduct a detailed review of its derivative portfolio and internal systems. The bank has pledged to absorb the ₹1,600 crore impact from the discrepancies in its earnings for Q4 FY25 or Q1 FY26, assuring investors that its capital adequacy and profitability are strong enough to manage the financial strain.
The bank has also emphasized its commitment to transparency and has pledged to make all findings and actions related to the audit publicly available, reinforcing its focus on maintaining investor confidence and regulatory compliance.
Conclusion
The intervention by the Reserve Bank of India has proven to be a turning point for IndusInd Bank shares, which surged by 3.41% following the reassuring statement. While the bank still faces challenges regarding its derivative portfolio, its strong capital base and commitment to transparency have helped restore investor confidence. As the bank continues to absorb the one-time impact from the discrepancies, it remains well-positioned for long-term growth.
The IndusInd Bank stock is expected to continue its recovery, making it an attractive option for investors who are looking for stability and growth in the Indian private banking sector.
