On March 17, 2025, IndusInd Bank stock surged nearly 6% to ?709 in intraday trading on the BSE, rebounding from recent volatility after the Reserve Bank of India (RBI) stepped in to calm depositors. The central bank emphasized the bank’s financial resilience, dispelling concerns triggered by a recent accounting mishap.
Recovery After Sharp Decline
On 11th March, the lender’s shares had plummeted 27% following the announcement that the bank had discovered an accounting error, eroding nearly 2.35% of its capital. However, the RBI’s public reassurance and directive for the bank to expedite corrective measures by Q4 FY25 spurred a partial recovery, with shares climbing nearly 12% from the low made on 12th March.
Regulatory Confidence in Stability
The RBI affirmed IndusInd Bank’s “satisfactory” financial health, citing robust capital buffers. Disclosures revealed a CAR (capital adequacy ratio) of 16.46% and PCR (provision coverage ratio) of 70.20% as of December 2024, alongside an LCR (liquidity coverage ratio) of 113% against a regulatory requirement as of March 9, 2025. An external audit has been commissioned to assess the error’s full impact, with remedial actions underway.
Clouds of Worry Still Not Gone Despite Rebound
Furthermore, leadership changes have added to the bank’s challenges. Earlier this month, RBI granted CEO Sumant Kathpalia a one-year tenure extension, despite expectations of a three-year renewal. On 18 January 2025, the bank’s CFO also resigned, citing other professional opportunities.
Bank Overview and Market Context
It is anticipated that the bank’s core fundamentals could regain prominence once near-term uncertainties dissipate. A rebound in its microfinance portfolio, coupled with improved banking system liquidity and potential rate cuts, is expected to bolster profitability. Recent regulatory hesitance to grant the CEO a three-year term has raised eyebrows. Market watchers also speculate on RBI’s LOLR (lender of last resort) mechanisms, though no such intervention has occurred.
The IndusInd Bank share price rebound reflects tempered optimism, but sustained recovery hinges on resolving operational uncertainties and restoring investor trust.
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