Complete remedial action this month: RBI to IndusInd Bank

Assuring customers that IndusInd Bank remains ‘well-capitalised’, the Reserve Bank of India (RBI) on Saturday directed the bank’s board to complete remedial action relating to estimated Rs 2,100 crore accounting discrepancy within this month.

The development assumes significance as IndusInd Bank recently disclosed a discrepancy in accounting with an estimated impact of 2.35 per cent of the bank’s net worth. Soon after the disclosure, massive price correction in the bank’s scrip was witnessed.

In a statement issued on Saturday, the RBI said on basis of the disclosures available in public domain, the bank has already engaged an external audit team to comprehensively review their current systems, and to assess and account for the actual impact expeditiously.

The RBI has directed the IndusInd Board and the management to have the remedial action completed fully during the current quarter viz., Q4FY25, after making required disclosures to all stakeholders.

In a clarificatory statement, the RBI assuaged the concerns of customers while stating that there was no need for depositors to react to the speculative reports at this juncture.

“There has been some speculation relating to IndusInd Bank Ltd in certain quarters, perhaps arising from recent events related to the bank,” the central bank said, while assuring the customers and investors that the bank’s financial health remains stable and is being monitored closely by it.

IndusInd Bank had informed that the accounting lapse was noted around September-October last year and the bank gave a preliminary update to the RBI about this last week.

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

The RBI, while sharing financial parameters of the bank, said the bank is well-capitalised and the financial position remains satisfactory.

The bank, as per auditor-reviewed financial results of the bank for the quarter ended December 31, 2024, has maintained a comfortable Capital Adequacy Ratio of 16.46 per cent and Provision Coverage Ratio of 70.20 per cent.

As against regulatory requirement of 100 per cent, the Liquidity Coverage Ratio (LCR) of the bank was at 113 per cent as on March 9.

Grappling with discrepancies in accounting estimated to be Rs 2,100 crore, IndusInd Bank’s financial statements are likely to be reviewed by the Financial Reporting Review Board (FRRB) of the Institute of Chartered Accountants of India (ICAI), which conducts the review of financial statements of companies to assess compliance with Accounting Standards, Standards on Auditing, Schedule II and III of the Companies Act, 2013, among others.