IndusInd Bank shares surge up to 6% after tumbling 27% in previous session; check latest developments

The stock jumped as much as 5.9% to ₹694.70 apiece on the NSE.

The final number will be known after the external agency, which the bank has appointed, finalises its report by early April.

In a stock exchange filing, private sector lender IndusInd Bank on Monday disclosed that the bank has noted some discrepancies in its derivatives portfolio, which could have an adverse impact of about 2.35% of the bank's net worth as of December 2024 as per its internal review.

Analysts peg the discrepancy at ₹2,100 crore in absolute terms.

The bank has, in parallel, appointed an external agency to independently review and validate the internal findings.

"The bank's profitability and capital adequacy remain healthy to absorb this one-time impact. The issue was identified by the bank... The bank has enough reserves and capital to manage this..." Kathpalia said.

In an analyst call late on Monday night, Kathpalia said that the discrepancy in the derivative portfolio has been accumulated in the book over a period of 5-7 years prior to April 1, 2024.

The discrepancy in IndusInd Bank's treasury business went unnoticed despite multiple audits, like those of internal, statutory, and compliance, as well as by the RBI.

He said the bank started reviewing its internal trade book after the RBI circular in September 2023, which mandated that internal trade in derivatives was to be discontinued from April 1, 2024.

"…We started observing discrepancies in our (derivatives) business in October, and then we hired an external agency to review our business. That is why we are comfortable that by the end of March or early April, we (the external agency report) should be able to identify the gaps," Kathpalia said.

Kathpalia said that IndusInd Bank had given a "preliminary update" about this discrepancy to the banking regulator RBI last week.

Asked in the analyst call as to whether this discrepancy has had a bearing on his re-appointment as MD & CEO, Kathpalia said, "Of course this would have a bearing because they were aware of the issue”.

The RBI last week approved only a one-year extension to Kathpalia till March 23, 2026, as against three years proposed by the bank's board.