IndusInd Bank says networth to take 2.35% hit due to account discrepancies; lender hires external agency to review findings

IndusInd Bank, in a stock exchange filing, informed that it has appointed an external agency to independently review and validate the internal findings. “A final report of the external agency is awaited, and based on which the bank will appropriately consider any resultant impact in its financial statements,” the bank said in a statement.

The bank, however, said that its profitability and capital adequacy remain healthy to absorb this one-time impact.

The review was undertaken following the Reserve Bank of India’s (RBI) directions on the investment portfolio of lenders, issued in September 2023, relating to 'Other Asset and Other Liability' accounts of the portfolio.

Meanwhile, according to news reports, RBI had granted a one-year extension to Sumant Kathpalia, managing director (MD) and chief executive officer (CEO) of IndusInd Bank, despite the bank's board requesting a three-year reappointment.

The bank, in a stock exchange filing post-market hours on Friday, said, "The Reserve Bank of India, via its letter dated March 6, 2025, has conveyed its approval for the re-appointment of Sumant Kathpalia as MD & CEO of the bank for a further period of one year with effect from March 24, 2025, till March 23, 2026."

This led the IndusInd Bank shares on Monday to tumble as much as 5.38% to hit its 52-week low of ₹886.40 apiece on BSE during intraday trade. The scrip settled at ₹901.95 apiece on the National Stock Exchange, declining 3.71%.

This is the second time that the RBI approved a shorter tenure for Kathpalia instead of a full three-year term.

IndusInd Bank reported a weak set of earnings in the quarter ended December 2024, as its net profit declined 39% to ₹140 crore from ₹230 crore in the same period last year. Its net interest income, or the difference between interest earned on loans and expended on deposits, rose 11% to ₹12,800.77 crore as against ₹11,572.25 crore in the year-ago period.

A sharp decline in profitability came after the bank increased provisions for bad loans to ₹1,743.63 crore from ₹969 crore last year.

The bank's asset quality slowed a deterioration as its gross non-performing assets (NPAs) as a percentage of total advances jumped to 2.25% from 1.92% and its net NPAs rose to 0.68% at the end of the December quarter, 0.57% during the same period last year.