RBI Governor Sanjay Malhotra said that the overall banking system remains robust. Referring to recent developments at IndusInd Bank, he said, “Such episodes will occur, but they should not concern us excessively as long as they remain isolated.”
Malhotra added that IndusInd Bank has taken adequate measures to improve its accounting and other internal practices. “On the whole, IndusInd Bank is doing well,” he said.
“The MD and CEO has resigned – I thought that should be good enough. What more are you hinting at? Do you expect the board to resign too?” the RBI Governor said on IndusInd Bank.
RBI Deputy Governor Swaminathan J said that discrepancies flagged by the regulator have already been addressed in the fourth quarter (Q4) results, as directed by the RBI. A forensic audit has also been conducted to ensure accountability. “Each such crisis gives us valuable lessons and helps us sharpen our supervisory framework,” he said.
Swaminathan also said that the lender has been updating the regulator on its succession planning and that the process is on track. “We hope the matter will settle down very soon,” he added.
A recent order from capital markets regulator the Securities and Exchange Board of India (SEBI), which barred five key management personnel (KMPs), including former Managing Director and Chief Executive Officer Sumant Kathpalia and former Deputy CEO Arun Khurana, from trading in securities.
The SEBI order prohibits them from buying, selling, or dealing in securities, directly or indirectly, until further notice. It also restricts any deposits into or debits from their bank accounts without prior approval from the regulator.
IndusInd Bank had reported a net loss of over ₹2,300 crore for the March quarter as a result of the accounting issues within the derivative portfolio and stress within the microfinance book.
Of the 47 analysts tracking IndusInd Bank, 22 of them now have a ‘Sell’ rating on the stock. 15 analysts have a ‘Hold’ recommendation, while 10 of them still have a ‘Buy’ rating.
IndusInd Bank’s shares are trading 5.02% higher on Friday at ₹843.55, having recovered 39% from their 52-week lows. Despite this, the stock has fallen 13% on a year-to-date basis so far.
With inputs from Ritu Singh
