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Key Points

IndusInd Bank experienced a significant stock price surge after the Reserve Bank of India signaled confidence in the bank's recovery from recent accounting issues. RBI Governor Sanjay Malhotra and Deputy Governor J Swaminathan publicly supported the bank, stating that necessary steps have been taken to address financial irregularities. The bank had previously disclosed accounting errors totaling around $310 million and saw the resignation of its top executives in April. Despite the challenges, regulators believe the bank is on track to stabilize its operations and restore investor confidence.

Key Points: RBI Signals Stability for IndusInd Bank After Accounting Probe

  • RBI confirms stability returning to IndusInd Bank after accounting disclosures
  • Bank stock rises 5.3% on regulatory reassurance
  • Top executives resigned following financial irregularities
  • Derivative trade and microfinance income errors revealed
2 min read

IndusInd Bank shares jump after RBI signals stability ahead

RBI Governor reassures investors about IndusInd Bank's recovery after accounting issues, leading to stock price surge

"IndusInd Bank has taken enough steps to improve accounting practices. The bank is doing well on the whole. - Sanjay Malhotra, RBI Governor"

Mumbai, June 6

Shares of IndusInd Bank rose as much as 5.3 per cent on Friday, after the Reserve Bank of India (RBI) said the problems at the private sector lender are likely to settle soon.

However, the stock later gave up some of its early gains. During mid-day trade, around 1:45 pm, IndusInd Bank shares were seen consolidating and were trading at Rs 827.85, up by Rs 24.65 or 3.07 per cent on the National Stock Exchange (NSE).

The bank had been facing scrutiny due to past accounting issues.

RBI Deputy Governor J Swaminathan said that things should return to normal at IndusInd Bank soon.

This reassurance came as a relief to investors and pushed the stock higher, making it one of the top gainers on the Nifty Bank index, which itself rose over 1.5 per cent following an interest rate cut and changes to the cash reserve ratio announced earlier in the day.

RBI Governor Sanjay Malhotra also spoke positively about the bank during a press conference after the central bank’s monetary policy meeting.

He said IndusInd Bank has taken enough steps to fix its accounting practices and is doing well overall. "IndusInd Bank has taken enough steps to improve accounting practices. The bank is doing well on the whole," said the RBI Governor.

He also noted that the resignation of the bank’s top executives should be “good enough” to bring things under control.

The bank has been under pressure since March, when it disclosed that incorrect accounting of internal derivative trades had caused a $230 million loss for the financial year that ended on March 31.

In addition, an internal audit found that about $80 million in interest income from its microfinance business was wrongly recorded over three quarters. The bank reversed this in January.

Following these revelations, IndusInd Bank’s CEO Sumant Kathpalia and his deputy Arun Khurana resigned in April.

RBI Deputy Governor Swaminathan said that everything that was supposed to play out over the last three months is more or less on track and that stability is returning to the lender.

Despite today’s gains, IndusInd Bank’s stock is still down about 6 per cent since the first disclosure of the accounting issues. In comparison, the Nifty Bank index has risen by 17 per cent during the same period.

- IANS

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Reader Comments

R
Rajesh K.
Good to see RBI stepping in to restore confidence. But investors should remain cautious - one statement doesn't fix underlying issues overnight. The bank needs to rebuild trust through consistent performance. #StockMarket
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Priya M.
As someone with an IndusInd savings account, this news is reassuring. But I hope they improve their customer service too - been facing issues with their mobile app for weeks now! 🤦‍♀️
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Amit S.
The stock jump shows how much our markets depend on RBI's words. But what about the ₹230 crore loss? Who's accountable for that? Hope SEBI investigates properly.
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Sanjana R.
Bought some shares today after reading RBI's positive outlook. Fingers crossed! 🤞 Private banks have more growth potential than PSUs if they maintain transparency.
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Vikram J.
The resignations of top executives should have happened sooner. Better late than never I guess. Hope the new management brings fresh perspective and stricter financial controls.
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Neha T.
Interesting how the stock is still down 6% despite today's jump. Shows how deep the damage was. Might be a good time for long-term investors to consider - but do your research first!

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