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IndusInd Bank reports a Rs 2,100 crore accounting discrepancy, leading to a 27% share decline. Despite CEO Sumant Kathpalia's assurances of strong reserves, investor confidence falters. Independent review results expected by April.

IndusInd Bank's Rs 2,100 Crore Discrepancy

IndusInd Bank experiences a significant Rs 2,100 crore accounting issue, leading to a dramatic 27% stock market decline. Despite reassurances from CEO and a pending external review, concerns over leadership and financial stability persist.

IndusInd Bank faces Rs 2,100 Crore setback, shares plummet

IndusInd Bank faces a Rs 2,100 crore discrepancy in derivatives, causing shares to plunge 27%. Despite CEO assurances, confidence wanes. An independent review is ongoing, with results expected by April.

IndusInd Bank's handling of a significant Rs 2,100 crore accounting discrepancy failed to prevent a dramatic drop in its share value, which plummeted over 27% on the stock market.
CEO and Managing Director Sumant Kathpalia assured stakeholders that the bank retains sufficient reserves and capital to manage the fallout. However, this reassurance did little to stabilize investor confidence.
The discrepancy, which emerged in the bank's derivatives portfolio, was initially identified between September and October of the previous year.
The bank has since provided a preliminary update to the Reserve Bank of India (RBI), with the full impact expected to be clarified once an external agency completes its independent review by early April.
On Monday, IndusInd Bank disclosed through a stock exchange filing that the identified discrepancies could adversely affect about 2.35% of its net worth as of December 2024, according to an internal review.
Analysts have evaluated the financial discrepancy at roughly Rs 2,100 crore. To ensure thorough evaluation, the bank has hired an external agency to independently validate its findings.
Kathpalia affirmed that the bank's overall profitability and capital adequacy remain robust and capable of absorbing this one-off issue, which was self-identified by the bank.
The stock market reacted sharply, with IndusInd Bank shares plunging 27.17% to close at Rs 655.95 on the BSE. The stock hit a 52-week low of Rs 649, marking a 28% decline from the previous day's closing price of Rs 900.
During a late-night analyst call on Monday, Kathpalia explained that the discrepancies had accumulated in the bank's books over the last 5-7 years, prior to April 1, 2024.
This went undetected through various internal, statutory, compliance, and RBI audits.
The issues surfaced during a review of the internal trade book, prompted by an RBI circular issued in September 2023. The circular required the discontinuation of internal trade in derivatives starting April 1, 2024.
"We began noticing discrepancies in October, which prompted us to engage an external agency for a comprehensive review. We anticipate their report by the end of March or early April," Kathpalia stated.
Kathpalia also mentioned that a "preliminary update" on the discrepancy was communicated to the RBI last week.
When questioned during the analyst call about the impact of this issue on his potential reappointment as Managing Director, सुमंत Kathpalia paused, underscoring the broader implications of the discrepancy for bank leadership decisions.

IndusInd&nbsp;Bank shares plunged over 10% in Monday's trade to Rs 1,068.
This comes after a report, quoting whistleblowers, said a group of senior employees&nbsp;of&nbsp;IndusInd Bank's arm, Bharat Financial Inclusion (BFIL), have alerted the Reserve Bank of India (RBI) about lapses in governance and accounting norms to allegedly 'evergreen' loans running into thousands of crores since the outbreak of Covid-19.
However, the management of&nbsp;IndusInd Bank has refuted the allegations around the evergreening of loans, citing it as &lsquo;inaccurate and baseless.&rsquo;&nbsp;
The private bank mentioned, "Due to a technical glitch in May 2021, nearly 84,000 loans were disbursed without the customer consent getting recorded at the time of loan disbursement. This issue was highlighted by the field staff within two days and the technical glitch was rectified expeditiously."
Motilal&nbsp;Oswal&nbsp;in a note said that the stock could witness some pressure due to adverse media articles and the asset quality stress reported by some other MFI lenders. Nevertheless, the brokerage expects the impact to be controlled. "We maintain BUY, with unchanged target price of&nbsp;₹1,400," said Motilal Oswal.

Stock Shock: Why is IndusInd bank down 10%

IndusInd Bank has refuted the allegations around the evergreening of loans, citing it as ‘inaccurate and baseless.’ 

IndusInd Bank: Shares fall 10%

IndusInd Bank has refuted the allegations around the evergreening of loans, citing it as &lsquo;inaccurate and baseless.&rsquo;&nbsp;

IndusInd&nbsp;Bank shares plunged over 10% in Monday's trade to Rs 1,068.
This comes after a report&nbsp;said a group of senior employees&nbsp;of&nbsp;IndusInd Bank's arm, Bharat Financial Inclusion (BFIL), have alerted the Reserve Bank of India (RBI) about lapses in governance and accounting norms to allegedly 'evergreen' loans running into thousands of crores since the outbreak of Covid-19.
However, the management of&nbsp;IndusInd Bank has refuted the allegations around the evergreening of loans, citing it as &lsquo;inaccurate and baseless.&rsquo;&nbsp;
The private bank mentioned, "Due to a technical glitch in May 2021, nearly 84,000 loans were disbursed without the customer consent getting recorded at the time of loan disbursement. This issue was highlighted by the field staff within two days and the technical glitch was rectified expeditiously."
Motilal&nbsp;Oswal&nbsp;in a note said that the stock could witness some pressure due to adverse media articles and the asset quality stress reported by some other MFI lenders. Nevertheless, the brokerage expects the impact to be controlled. "We maintain BUY, with unchanged target price of&nbsp;₹1,400," said Motilal Oswal.

Sensex up 256 points, Nifty at 11,351; RIL, banks rise

Equity markets moved higher in the opening session on Thursday led by heavyweight Reliance and&nbsp;banking stocks.
At 9:30 am, the Sensex was 256 points up at 38,450. Similarly, the Nifty was 0.65% in the green at 11,351.
IndusInd Bank, Tata&nbsp;Motors, Bajaj&nbsp;Finserv, SBI and Reliance were the top five index movers.
Global sentiment was positive as the Dow Jones ended 439 points higher in the Wednesday session and&nbsp;all Asian bourses&nbsp;were also trading in the green.

11,351.05&nbsp; 73.05 (0.65%)
38,450.73 +256.81 +0.67%

Equity markets moved higher in the opening session on Thursday led by heavyweight Reliance and&nbsp;banking stocks.
At 9:30 am, the Sensex was 256 points up at 38,450. Similarly, the Nifty was 0.65% in the green at 11,351.
IndusInd Bank, Tata&nbsp;Motors, Bajaj&nbsp;Finserv, SBI and Reliance were the top five index movers.
Global sentiment was positive as the Dow Jones ended 439 points higher in the Wednesday session and&nbsp;all Asian bourses&nbsp;were also trading in the green.

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