While management insists that the final impact will be confirmed by March-April 2025, the revelation has triggered a massive stock rout.
A Timeline of Troubles
The bank has faced multiple setbacks in recent years. In May 2021, a technical glitch at its microfinance subsidiary led to 84,000 unauthorised loan disbursements.
More recently, CFO Gobind Jain resigned in January 2025, followed by RBI approving CEO Sumant Kathpalia’s tenure for just one year instead of three on March 7.
The latest derivatives issue, disclosed on March 10, has only intensified concerns over governance and internal controls.
CEO & Promoters Try to Calm Nerves
CEO Sumant Kathpalia acknowledged that RBI was aware of the derivatives issue, adding, “I think RBI is uncomfortable with my leadership skills, and we have to respect that.”
Also read: IndusInd promoter urges shareholders not to panic, says issue will be resolved
Meanwhile, Ashok Hinduja, Chairman of IndusInd International Holdings, called the crisis a “routine problem”, assuring that the bank remains financially strong with an operating profit of ₹11,000 crore in nine months.
Brokerages have taken a cautious stance, citing governance concerns. Morgan Stanley flagged downside risks, Macquarie questioned internal processes, and Kotak downgraded the stock to ‘reduce’, warning that credibility restoration could take several quarters.
On March 11, IndusInd Bank shares nosedived 25%, marking the biggest single-day fall in its history. The sell-off wiped out ₹18,000 crore in market value, dragging the stock to its lowest level since November 2020.
With investor confidence shaken, IndusInd is now valued at par with mid-sized PSU banks, reflecting deep concerns over leadership, governance, and risk controls.
First Published: Mar 11, 2025 3:15 PM IST