IndusInd Bank is preparing for a significant financial hit of up to ₹2,000 crore, impacting 2.35% of its net worth, as it addresses long-standing discrepancies in derivative transactions. The bank discovered the issue during an internal review between September and October and later hired an external agency for further investigation.
The bank has already provided a preliminary update to the Reserve Bank of India (RBI) and expects a final audit report by March-end. CEO Sumant Kathpalia reassured investors, stating, “Although the initial findings align with our assessment, we want to ensure complete validation before taking action.”
Stock Performance and Market Impact
- IndusInd Bank’s stock fell 3.87% to ₹900.50 on Monday.
- Market capitalization has declined by 37% over six months.
- The stock now trades at levels last seen in late 2022.
Leadership Uncertainty and CEO Tenure
Kathpalia, whose term was extended by just one year instead of the usual three, acknowledged concerns, stating, “I remain committed for one year, and the board will evaluate potential successors.”
Market analysts remain cautious:
- Bernstein suggests the stock won’t see a re-rating until a long-term CEO is in place.
- Macquarie Capital speculates that Kathpalia may step down early or that the bank may bring in a public sector banker as CEO.
As IndusInd Bank navigates this financial and leadership crisis, investors are awaiting RBI’s final verdict and the external audit findings to assess the bank’s future trajectory.
