1 / 8Derivatives Disclosure Sparks Panic: IndusInd Bank has come under fire after disclosing a ₹1,580 crore discrepancy in its derivatives portfolio, potentially impacting 2.35% of its net worth. The issue, identified internally in September-October 2024, led the bank to hire an external agency for further review. The management has assured that the final loss amount will be determined by March-April 2025, but the revelation has shaken investor confidence, triggering a massive stock sell-off.
2 / 8Timeline of Events—A String of Setbacks: IndusInd Bank has faced multiple credibility concerns over the years. In May 2021a technical glitch at its microfinance subsidiary, BFIL, led to 84,000 loans being disbursed without recorded customer consent. More recently, CFO Gobind Jain resigned in January 2025just before Q3 earnings, while on March 7RBI approved CEO Sumant Kathpalia’s tenure for only one year instead of three. The latest derivatives-linked discrepancy, disclosed on March 10has only added to governance concerns, raising questions about internal controls and compliance.
3 / 8What the Bank Said on the Discrepancies: The management has maintained that the issue was identified internally, and the bank hired an external advisor to review its processes and pinpoint the root cause. The final amount is expected to be crystallised by March-April 2025. The bank, however, asserted that the irregularity would not impact its overall growth and business prospects. Investors, however, remain wary, as the sequence of events paints a picture of deeper structural concerns within the bank’s risk management framework.
4 / 8CEO’s Response & RBI’s Short Tenure Approval: CEO Sumant Kathpalia has acknowledged that the RBI was aware of the derivatives issue before granting him a shorter-than-expected one-year tenure extension. In a rare admission, he stated, “I think RBI is uncomfortable with my leadership skills in running the bank, and we have to respect that.” The board has now been tasked with evaluating both internal and external candidates for the CEO position, adding to leadership uncertainty at a critical juncture for the bank.
5 / 8Ashok Hinduja Urges Calm, Calls Crisis a ‘Routine Problem’: IndusInd International Holdings Chairman Ashok Hinduja has urged shareholders to stay calm, calling the current crisis a “routine problem” rather than a cause for panic. In a conversation with CNBC-TV18, he emphasised that IndusInd Bank remains financially strong, citing an operating profit of over ₹11,000 crore in the first nine months of FY25. He also highlighted that the discrepancies were identified internally by the management and urged the market to appreciate the bank’s transparency in addressing the issue and making provisions.
6 / 8Q3 FY25 Financial Snapshot: IndusInd Bank’s financials had already shown signs of stress before the latest controversy. Its microfinance loan book stood at ₹32,564 crore, forming 9% of total advances. Gross NPAs rose to 2.25% (from 2.11% QoQ), primarily due to stress in the microfinance segment, while gross slippages stood at ₹2,200 crore. The capital adequacy ratio remained at 16.46%, but investor focus has now shifted to whether these numbers fully capture the risk exposure of the bank.
7 / 8Street View—Brokerages Downgrade IndusInd Bank: The derivatives discrepancy, combined with leadership concerns and past governance issues, has led to a wave of downgrades from top brokerages. Morgan Stanley has flagged downside risks, citing a lack of visibility on the stock’s outlook. Macquarie raised concerns about weak internal processes, while Kotak downgraded the stock to ‘reduce’, stating that credibility restoration will take time. Nuvama, which has also downgraded the stock, highlighted the discomforting sequence of events, saying “IndusInd’s credibility and earnings shall be impacted.”
8 / 8Stock Crash—₹18,000 Crore Wiped Out On March 11: IndusInd Bank shares nosedived 27%, marking the biggest single-day drop in the bank’s history. The sharp fall has erased ₹18,000 crore in investor wealth, bringing the stock to its lowest level since November 2020. The stock is now valued at par with mid-sized PSU banks, reflecting investors’ shaken confidence in the bank’s governance, leadership, and risk management.
