IndusInd Bank faces scrutiny over financial discrepancies

IndusInd Bank's shares are attracting attention as rating agency Crisil decides not to place the bank on ratings watch. This decision follows concerns about discrepancies in the bank's derivatives portfolio. The full impact of these discrepancies will become clearer once an external agency reports its findings. Crisil noted that while these discrepancies may lead to a one-time financial impact, IndusInd's operating profitability and capital adequacy are currently strong enough to handle it. The agency will continue to monitor the situation closely for any changes to the bank’s credit risk profile. On the other hand, Moody's Investors Service has placed IndusInd Bank’s Ba1 Baseline Credit Assessment under review for a possible downgrade. This was prompted by the bank's recent announcement about discrepancies in its derivatives. Although Moody’s believes the immediate effects on profitability and capital can be managed, it expressed concern over the bank’s internal controls. Moody’s also pointed to uncertainty regarding potential leadership changes at IndusInd Bank as a factor to watch. Recently, the bank reported that the discrepancies could lower its reported net worth by about 2.35%, which is equivalent to Rs 1,530 crore. This amount is significant, considering the bank's net profit of Rs 4,904 crore for the nine months ended December 31, 2024. Crisil predicts that the bank's Tier I capital adequacy ratio of 15.2% will also be affected by 35 basis points.