IndusInd Bank's Strategic Stake Increase Amid Accounting Turmoil

IndusInd Bank, despite an accounting discrepancy impacting its net worth, has not sought fresh capital from its promoters. IIHL, its promoter, plans to increase its stake from 16% to 26% and commits to infuse capital if needed. An external review by PwC is underway to ascertain discrepancies.

Despite significant financial setbacks, IndusInd Bank has opted not to seek fresh capital from its promoters, according to IIHL chairman Ashok Hinduja. The bank experienced a substantial dip in its net worth due to an accounting discrepancy, yet its overall capital adequacy remains comfortably above 15%, reassuring stakeholders.

Recently, the Reserve Bank of India granted the Hinduja Group's investment arm, IIHL, in-principle approval to boost its stake in IndusInd Bank from 16% to 26%. Hinduja noted that the timing is favorable due to a drop in stock price, although the benefits for the bank as an institution are debated.

Further scrutiny ensues as IndusInd Bank disclosed discrepancies in its derivatives portfolio, potentially impacting 2.35% of its net worth, estimated at Rs 2,100 crore. An external audit by PwC is expected to shed light on the origins of the discrepancy, with conclusions anticipated by March 2024.

(With inputs from agencies.)