IndusInd Bank Share In Focus As Bank Raises Rs 11,000 Crore Via CDs; Key Points – News18
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IndusInd bank issued CDs with maturities ranging from three months to one year, priced between 7.80% and 7.90%
IndusInd Bank Share Price
IndusInd Bank Share Price: Shares of IndusInd Bank will be in focus in Tuesday’s trade after the lender raised Rs 11,000 crore by selling certificates of deposit (CDs) on Monday. The move is aimed at strengthening its funding position amidst deposit withdrawals, following the disclosure of a Rs 2,000 crore accounting discrepancy in its derivatives book.
The fundraising initiative signals a potential rebound in investor confidence, especially after the Reserve Bank of India (RBI) confirmed on Saturday that the private lender holds sufficient capital, despite a likely impact on its net worth.
The bank issued CDs with maturities ranging from three months to one year, priced between 7.80% and 7.90%, according to data from the Clearing Corporation of India (CCIL).
Despite raising funds at a slightly higher rate than its peers, IndusInd Bank’s ability to mobilize Rs 11,000 crore in a single day suggests that investors are reassured by the Reserve Bank of India’s (RBI) statement confirming the bank’s strong capital position and satisfactory financial health, according to market experts.
The amount raised by IndusInd Bank accounted for more than 40% of the total Rs 27,140 crore in certificates of deposit (CDs) issued by all banks on Monday, based on Clearing Corporation of India (CCIL) data.
What’s the Issue at IndusInd Bank?
Earlier this week, IndusInd Bank disclosed accounting discrepancies in its derivatives portfolio, specifically related to forex hedging.
In a regulatory filing on March 10, the bank revealed that an internal review had identified discrepancies in the account balances of its derivatives portfolio. The Mumbai-based bank estimated that these discrepancies could have a 2.35% adverse impact on its net worth as of December 2024, translating to approximately Rs 2,100 crore.
The review was prompted by the Reserve Bank of India’s (RBI) instructions issued in September 2023, which required lenders to assess the ‘Other Asset and Other Liability’ accounts within their investment portfolios.
Following the disclosure, IndusInd Bank held an analyst call, explaining that an external auditor is reviewing the issue, with the report expected by the end of March 2024. However, the bank reassured stakeholders that its profitability and capital adequacy remain robust enough to absorb this one-time hit.
In a related development, the RBI recently extended the current CEO’s term by only one year, instead of the three years the bank had requested. According to an Economic Times report, the RBI has also directed the bank’s board to look for external candidates for both the CEO and COO roles.
