IndusInd Bank’s stock price fell 27% on March 11, reaching its lowest level in nearly five years. The sharp decline was due to accounting discrepancies in the bank’s derivatives portfolio, leading to a major financial setback. As a result, Life Insurance Corporation (LIC), a major investor, suffered a loss of around ₹965 crore.

The bank discovered these discrepancies while reviewing its processes after the Reserve Bank of India’s (RBI) new regulations took effect on April 1, 2024. The internal review estimated a negative impact of 2.35% on IndusInd Bank’s net worth, translating to a loss of ₹2,000-2,100 crore post-tax.

This loss is expected to significantly impact the bank’s Q4FY25 earnings, potentially leading to a net loss for the quarter. Analysts have also expressed concerns about the bank’s overall performance, including its weakened financials and leadership uncertainty.

Over the past year, IndusInd Bank’s stock has dropped more than 55%, making it one of the worst-performing Nifty 50 stocks. Several brokerages have downgraded the stock, reflecting concerns about its financial stability and future profitability.

Source: Mint