IndusInd Bank Ltd. promoter Ashok Hinduja declined on Tuesday to comment on the accounting-discrepancy fiasco, saying that the board of directors would review once the report from consulting firm PwC comes.
Hinduja said that unless the report was out, he has "no prerogative to talk about this subject". However, he emphasised that credibility for any banking or financial services institution was the most important.
"Once the report comes, it will go to the board and then, the board will review," the IndusInd International Holdings chairperson said on the sidelines of an event in Mumbai. "They have their various committees and then they will take a call who was the person responsible in the last so many years or was it an error?"
As on December end, IndusInd International Holdings held a 12.4% stake in the bank and IndusInd Ltd. held a 3.88% stake, according to bourses.
As a promoter, Hinduja declined to comment on why the chief financial officer of the bank resigned right before the December-quarter results in January and why the Reserve Bank of India gave only a one-year extension to the managing director instead of three. But he said what the regulator did was right.
"Whatever management thought why (the) CFO has gone, they know better. Board will take a call and I think you should wait and watch," Hinduja said.
He also said IndusInd Bank remained comfortable in terms of capital adequacy despite the recent derivatives error and had not sought incremental funds from the promoter so far. However, the promoter is ready to infuse capital as and when required by the bank.
IIHL continues to await the final regulatory approval on increasing its stake in the bank to 26%, he said.
The promoter group is keen to increase its stake because it is an "opportune time", given the book value and net worth of the bank and any shareholder would be happy to invest in the bank. This is a temporary "panic situation" and everybody gets worried in such situations, according to Hinduja.
On March 10, IndusInd Bank disclosed an accounting discrepancy that led to a financial hit, which is equivalent of 2.35% of the bank's net worth as of Dec. 31, 2024. According to the lender, this was discovered as part of its review of its derivatives portfolio.
After this development, shares of the bank tanked nearly 30% but recouped some of the losses after the RBI clarified depositors of the bank need not worry. "The bank’s financial health remains stable and is being monitored closely by the Reserve Bank," the regulator said in a statement on its website last week.
IndusInd Bank remains well-capitalised, and its financial position remains satisfactory, the RBI said.
As per auditor-reviewed financial results of the bank for the quarter ended Dec. 31, 2024, the bank has maintained a comfortable capital adequacy ratio of 16.46% and provision coverage ratio of 70.20%. The liquidity coverage ratio of the bank was at 113% as on March 9 as against regulatory requirement of 100%, the central bank said.
The board and the management have been directed by the RBI to have the remedial action completed fully during the fourth quarter after making required disclosures to all stakeholders, it said.
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