IndusInd Bank's Rs 2,100 Crore Derivatives Discrepancy Shocks Market

IndusInd Bank grapples with a Rs 2,100 crore accounting discrepancy in its derivatives portfolio. Despite assurances of adequate reserves, the news prompted a sharp 27% drop in the bank's shares. An external agency is set to finalize a report by April, as CEO Sumant Kathpalia faces leadership scrutiny.

IndusInd Bank on Tuesday addressed a significant Rs 2,100 crore discrepancy within its accounting, assuring stakeholders of ample reserves to cover the deficit. However, this did little to prevent a massive share slump of over 27% on the bourses.

CEO and Managing Director Sumant Kathpalia revealed that the discrepancy was detected around September-October of the previous year. An external agency is set to conclude its independent report by early April, following a preliminary update to the RBI.

The accounting issues, identified within the bank's derivatives portfolio, signify potential adversities affecting 2.35% of its net worth by December 2024. The RBI's recent decision to extend Kathpalia's term by just one year, amid leadership concerns, highlights the urgency to resolve these discrepancies.

(With inputs from agencies.)