The money of IndusInd Bank and its depositors is completely safe. To address the concerns of IndusInd Bank customers and depositors, the Reserve Bank of India has clarified that there is no need for IndusInd Bank depositors to panic.
“There is no need for depositors to pay attention to speculations at this time. The financial condition of the bank remains stable, and the Reserve Bank is closely monitoring it.” The RBI has also posted this clarification on its website to clear all doubts about the bank.
RBI Assures IndusInd Bank’s Financial Stability
RBI has assured that IndusInd Bank has adequate capital, and its financial position remains satisfactory. According to RBI, the bank’s results and balance sheet, based on an auditor’s review for the quarter ending December 31, 2024, are strong.
As per the audit, the bank has maintained a capital adequacy ratio of 16.46% and a provision coverage ratio of 70.20%. Moreover, as of March 9, 2025, the bank’s liquidity coverage ratio (LCR) stood at 113%, exceeding the required 100%.
What Happened with the Accounting Irregularities?
This clarification from RBI follows the recent disclosure of accounting irregularities by IndusInd Bank. These irregularities led to a financial loss of 2.35% of the bank’s total assets as of December 31, 2024. The issue was detected after a review of the bank’s derivative portfolio.
On March 10, 2025, IndusInd Bank’s MD and CEO, Sumant Kathpalia, held a quick analyst call. He explained that the issue was related to internal trades done in the bank’s derivatives portfolio over the last 5-7 years. The bank had been doing swaps to secure its balance sheet by taking foreign currency loans. These swaps included both internal trades and external hedging. However, RBI had banned internal derivative trades starting April 1, 2024, causing this issue to become controversial.
RBI’s Instructions to IndusInd Bank
RBI has stated that, based on publicly available information, IndusInd Bank has already appointed an external audit team to review its systems and assess the impact of the irregularities. The bank’s board and management have been instructed to complete corrective actions by the end of the fourth quarter.
IndusInd Bank is well capitalised, depositors have nothing to worry, says @RBI. Indian central bank is closely monitoring the situation. So relax, no panic. Don’t rush to withdraw deposits. Not too often RBI issues such statement @MyIndusIndBank pic.twitter.com/bf3dIU32eg
— Tamal Bandyopadhyay (@TamalBandyo) March 15, 2025
What Happens if a Bank Faces Financial Stress?
India has never seen a scheduled commercial bank close down, and RBI has the power to take immediate action if any stress is detected. Under the Banking Regulation Act, RBI ensures that the interests of all depositors are protected by implementing rescue plans when necessary.
RBI backs IndusIndBank
Well-capitalized with16.46% Capital Adequacy Ratio
An isolated event with no bearing on long term fundamentals may have created a strategic opening pic.twitter.com/tkLTiQRwRH— The Man Who Never Shorts
(@5Man_Commander) March 15, 2025
In past cases, such as with Lakshmi Vilas Bank in 2019 and Yes Bank in 2020, RBI took steps to safeguard depositors. None of the depositors of these banks faced reductions in their deposits.
No Need to Worry About IndusInd Bank
The financial condition of IndusInd Bank is not at a level where RBI needs to intervene with protective measures. Therefore, there is no need for depositors to worry.