IndusInd Bank Rises 5% Following RBI's Assurance on Financial Stability

Shares of IndusInd Bank climbed 5% to ₹707 on the BSE during Monday’s intra-day trading after the Reserve Bank of India (RBI) reassured depositors about the private lender’s financial health. The reassurance came in the wake of an accounting error that resulted in significant market volatility for the bank’s stock.

As of 2:00 PM IST, IndusInd Bank share price was trading at ₹680.60, up 1.23% from its previous close, reflecting positive market sentiment after this development.

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Background of the Decline

The bank’s stock had witnessed a sharp decline of over 27% last Wednesday due to an accounting discrepancy, which led to an estimated capital loss of approximately 2.35%, amounting to ₹1,500-2,000 crore. The sudden drop triggered concerns among investors and depositors regarding the bank’s financial standing, leading to panic-driven sell-offs.

Between March 6 and March 11, IndusInd Bank’s stock plummeted by a total of 32%, wiping out significant market value. However, following RBI’s intervention and assurance, the stock rebounded by 17% from its one-week low of ₹605, recorded on March 12.

RBI’s Assurance and Oversight

In response to market concerns, the RBI stepped in to address speculation and reinforce confidence in the banking system. The central bank emphasized that IndusInd Bank remained well-capitalized and financially sound despite the recent market turbulence.

“The Reserve Bank affirms that the bank is well-capitalized, and its financial standing remains sound. Publicly available disclosures indicate that the bank has already engaged an external audit team to thoroughly examine its current systems and promptly assess the actual impact,” the RBI stated.

The RBI also confirmed that it was closely monitoring the situation and had directed the bank’s Board to complete necessary remedial actions in the January-March quarter (Q4FY25). The central bank’s proactive approach aimed to prevent further erosion of investor confidence and ensure that corrective measures were implemented swiftly.

Financial Indicators and Stability

Despite the recent challenges, IndusInd Bank’s financial indicators suggest stability. According to the auditor-reviewed financial results for the quarter ending December 31, 2024 (Q3FY25), the bank maintained a Capital Adequacy Ratio (CAR) of 16.46% and a Provision Coverage Ratio (PCR) of 70.20%.

Additionally, as of March 9, 2025, IndusInd Bank reported a Liquidity Coverage Ratio (LCR) of 113%, comfortably surpassing the regulatory requirement of 100%. These figures indicate that the bank has sufficient capital reserves to withstand financial stress and continue its operations without liquidity concerns.

Market Reaction and Future Outlook

The RBI’s reassurance played a crucial role in stabilizing investor sentiment, contributing to the recovery in the bank’s stock price. Analysts believe that while short-term volatility may persist, the bank’s fundamental financial position remains strong, and further improvements in governance and risk management could enhance investor confidence.

Market experts suggest that IndusInd Bank’s long-term outlook will depend on the effectiveness of its remedial measures, regulatory compliance, and the external audit’s findings. Investors will closely watch the bank’s Q4FY25 performance and the steps taken by its management to restore stability.

With the central bank’s close supervision and ongoing corrective actions, IndusInd Bank is expected to navigate the current challenges and gradually regain its market position.