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This is an archive article published on March 12, 2025
Derivative portfolio discrepancies: IndusInd Bank takes 2.35% potential hit on net worth
Rs 2,100 crore impact likely on the bank, says management
An illuminated signboard of IndusInd Bank is seen outside one of its branches, in New Delhi. (Source: Reuters)
IndusInd Bank on Monday disclosed that an internal review of its derivative portfolio has revealed a potential 2.35 per cent adverse impact on its networth. This will have an approximate impact of Rs 2,100 crore on the bank, the management said in an analyst call.
The review was conducted in response to the Reserve Bank of India’s (RBI) directives issued in September 2023, pertaining to the investment portfolio of lenders and the accounting treatment of ‘Other Asset and Other Liability’ accounts of the derivative portfolio. Internal derivative trades were not in compliance with rules enforced by the Reserve Bank from April 2024.
“The bank noted some discrepancies in these account balances,” the bank said in an exchange filing. “The bank’s detailed internal review has estimated an adverse impact of approximately 2.35 per cent of bank’s net worth as of December 2024,” it said.
The bank has also appointed a reputed external agency to independently review and validate the internal findings. “A final report of the external agency is awaited and basis which the Bank will appropriately consider any resultant impact in its financial statements,” it said.
The bank said its profitability and capital adequacy remains healthy to absorb this one-time impact.
“We can confirm that there will be no internal trades in our book… we have not entered into any internal trades,” Deputy CEO Arun Khurana said on a conference call. The internal trades that were there prior to that period, which were existing before April 1, have been unwound and all according mark-to-markets taken, he said.
The bank’s shares fell 3.60 per cent to Rs 900.60 on the BSE on Monday.
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Meanwhile, IndusInd Bank received the Reserve Bank of India’s approval on March 7 to reappoint Sumant Kathpalia as its chief executive officer and managing director. However, the central bank has only approved Kathpalia’s tenure extension for one year, from March 24, 2025, to March 23, 2026.
In September last year, IndusInd Bank’s board of directors had recommended a three-year term for its MD & CEO.
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