IndusInd Bank Shares Surge 5% Following RBI Assurance; Bank Faced ₹20 Billion Loss Due to Accounting Errors; Brokerages Downgrade Ratings to ‘HOLD’.
IndusInd Bank share price: IndusInd Bank shares climbed 5% to ₹707 in Monday's intra-day trading. Investor confidence strengthened following a statement from the Reserve Bank of India (RBI), leading to the share price surge.
RBI Clarifies on Bank's Financial Health
The RBI stated that IndusInd Bank's financial position is stable and that there is no need to react to any speculation regarding the bank. The Reserve Bank offered positive indications regarding the bank's capital adequacy ratio, liquidity coverage ratio, and provision coverage ratio.
How Did the Bank Incur Losses?
Accounting errors resulted in a loss of approximately ₹15-20 billion for the bank. This led to a significant decline in the bank's share price between March 6th and March 11th. However, from a low of ₹605 on March 12th, the share price has recovered by 17%.
RBI Directive and Strict Oversight
The RBI has directed the bank's board and management to take corrective measures by the fourth quarter of fiscal year 2025. The regulator also stated that it will continue to closely monitor the bank.
Brokerage Firms Downgrade Ratings
ICICI Securities downgraded IndusInd Bank's rating from ‘BUY’ to ‘HOLD’, setting a target price of ₹800. Similarly, Mirae Asset also downgraded the bank's rating to ‘HOLD’, setting a target price of ₹750.
The positive stance of the RBI regarding the bank's financial stability has led to a surge in share prices. However, uncertainty remains in the market. Investors will be watching the bank's future performance and the corrective measures suggested by the RBI.
