The Reserve Bank of India (RBI) has directed Induslnd Bank, a leading private sector bank in India, to complete remedial action within the fourth quarter following an accounting discrepancy of ₹2,100 crore. The central bank assured that Induslnd Bank remains financially stable and well-capitalized, urging depositors not to worry. The bank has engaged an external audit team to assess the actual impact, with findings expected by early April.
The Reserve Bank of India (RBI) has directed Induslnd Bank, a prominent private sector bank headquartered in Maharashtra, India, to complete its remedial action within the fourth quarter following an accounting discrepancy amounting to ₹2,100 crore. The central bank reassured depositors and investors that the bank remains well-capitalized and financially stable, closely monitoring the situation to prevent further disruptions.
Induslnd Bank recently disclosed an accounting lapse impacting approximately 2.35% of its net worth. This revelation led to a sharp decline in the bank’s share price, which plummeted by over 27% in a single day, wiping out 38% of its market capitalization in six trading sessions.
RBI’s Monitoring and External Review
To address the discrepancy, Induslnd Bank has engaged an external audit team to conduct a comprehensive review of its financial processes. The RBI stated that the audit findings, expected by early April, will determine the full extent of the issue and the necessary corrective measures.
The bank’s internal review identified discrepancies in its derivative portfolio, attributed to the implementation of RBI’s 2023 guidelines on investment classification, valuation, and operations. Specifically, the bank’s internal swaps were accounted for using cost-accounting rather than market valuation, leading to inconsistencies.
Leadership Changes and Next Steps
Amid these developments, Induslnd Bank has appointed an independent agency to validate internal findings. The bank’s CEO, Sumant Kathpalia, recently received RBI approval for a one-year tenure extension instead of the expected three years, while the Chief Financial Officer resigned in January to pursue other opportunities.
As the bank moves forward with its remedial actions, RBI’s oversight ensures financial stability and regulatory compliance, reinforcing depositor confidence in Induslnd Bank’s operational integrity.
