IndusInd Bank faced a major setback as its shares plummeted 27.17% on Tuesday, following revelations of a ?2,100 crore discrepancy in its derivatives portfolio. Despite management's assurances of strong reserves and capital adequacy, investor confidence remained shaken.

CEO & MD Sumant Kathpalia acknowledged that the issue was identified around September-October 2023, with a preliminary update shared with the RBI last week. An external agency has been appointed to validate internal findings, with a final report expected by early April. The discrepancy, accumulated over 5-7 years before April 1, 2024, had gone unnoticed despite multiple audits, including those by the RBI.

Following the RBI's September 2023 directive to halt internal derivative trades from April 1, 2024, the bank initiated a review of its internal trade book, which led to the discovery of discrepancies. "We started observing gaps in October and engaged an external agency. By March-end or early April, we expect clarity," Kathpalia stated.

The bank disclosed that the accounting lapse could impact 2.35% of its net worth as of December 2024. However, Kathpalia reassured stakeholders, asserting that IndusInd Bank’s profitability remains robust enough to absorb the one-time impact.

Investor concerns were further fueled by the RBI’s decision to extend Kathpalia’s tenure as CEO by just one year, instead of the three years proposed by the board. Addressing this, he remarked, “The RBI was aware of the issue, and it likely influenced their decision. This is a leadership test for the bank, but I believe our growth agenda will stay on track.”

On Tuesday, the bank’s stock hit a one-year low of ?649, a steep decline from ?900 the previous day, reflecting deep market unease over the unfolding situation.

IndusInd Bank faced a major setback as its shares plummeted 27.17% on Tuesday, following revelations of a ?2,100 crore discrepancy in its derivatives portfolio. Despite management's assurances of strong reserves and capital adequacy, investor confidence remained shaken.

CEO & MD Sumant Kathpalia acknowledged that the issue was identified around September-October 2023, with a preliminary update shared with the RBI last week. An external agency has been appointed to validate internal findings, with a final report expected by early April. The discrepancy, accumulated over 5-7 years before April 1, 2024, had gone unnoticed despite multiple audits, including those by the RBI.

Following the RBI's September 2023 directive to halt internal derivative trades from April 1, 2024, the bank initiated a review of its internal trade book, which led to the discovery of discrepancies. "We started observing gaps in October and engaged an external agency. By March-end or early April, we expect clarity," Kathpalia stated.

The bank disclosed that the accounting lapse could impact 2.35% of its net worth as of December 2024. However, Kathpalia reassured stakeholders, asserting that IndusInd Bank’s profitability remains robust enough to absorb the one-time impact.

Investor concerns were further fueled by the RBI’s decision to extend Kathpalia’s tenure as CEO by just one year, instead of the three years proposed by the board. Addressing this, he remarked, “The RBI was aware of the issue, and it likely influenced their decision. This is a leadership test for the bank, but I believe our growth agenda will stay on track.”

On Tuesday, the bank’s stock hit a one-year low of ?649, a steep decline from ?900 the previous day, reflecting deep market unease over the unfolding situation.