IndusInd Bank has received public backing from its promoter, a day after reporting a record loss of ₹2,329 crore for the fourth quarter of FY 2024–25. The loss stemmed from efforts to correct historical discrepancies in derivative transactions, misclassification of microfinance loans, and other accounting errors.
Ashok Hinduja, chairman of IndusInd International Holdings Ltd— the promoter of IndusInd Bank — expressed support for the interim management’s “swift” action to restore trust and transparency in the bank.
“I express my continued, unequivocal trust in the chairman and board of directors for their appropriate, swift actions to address the discrepancies and the attendant areas of concern,” Hinduja said.
He stressed that these corrective actions would lay the groundwork for improved governance and help restore public and investor confidence.
Welcoming the Reserve Bank of India’s “orderly” handling of the situation, Hinduja added that the promoter group remains committed to providing equity support, if needed, despite the bank’s healthy capital adequacy.
“Though the capital adequacy of the bank is quite healthy, for business growth, should any further equity be required, IIHL, the promoter of IBL, remains committed to supporting the bank, as it has done over the past 30 years,” said Hinduja.
Sebi view
Sebi chairman Tuhin Kanta Pandey on Thursday said the market regulator was examining potential securities law violations by senior management at IndusInd Bank. While the RBI was addressing banking-specific concerns, Sebi was investigating the case from the perspective of possible “egregious violations” under its purview.
“If there are any egregious violations by anyone in their capacity, Sebi is looking into it,” Pandey told reporters on the sidelines of an event organised by industry body Assocham in New Delhi.
On Wednesday, IndusInd Bank’s board said it suspects the involvement of certain employees in the fraud and directed the management to report the matter to investigative agencies and regulatory authorities.
Analysts cautious
Market analysts said IndusInd Bank will have to face multiple challenges in the medium term, even though it has taken most of the financial impact of the past irregularities in the fourth quarter .
“The bank needs to fix multiple areas, starting from deviation in lending and collection practices, impairment recognition norms and also significantly improve its financial reporting practices.
“With the retail deposit mix at sub-optimal levels, a tendency to operate in high-risk segments, changes in loan mix, higher opex intensity, elevated stress in the unsecured book, and the impending change in senior leadership, the bank is faced with multiple challenges in the medium-term,” said HDFC Securities in a report on Thursday.
“Q4FY25 was marked by multiple one-offs, including the reversal of several accounting lapses, resulting in a reported return on assets of (-1.7 per cent).
“The bank recognised the full impact of these issues during the quarter, leading to a negative hit of ₹46.6 billion on profit before tax.
“Advances declined as the bank strategically reduced its corporate lending to manage liquidity.
“Deposit growth remained muted in the light of the ongoing corporate governance concerns. Given the evolving situation, we believe the outlook for FY26 remains weak,” said Motilal Oswal in a report.
Despite the cautious outlook, the IndusInd Bank scrip closed 1.82 per cent up at ₹785.10 on the BSE on Thursday.
