More Stories

Informist, Monday, Mar. 17, 2025

--Moody's affirms IndusInd Bank ratings 

--Moody's: Put IndusInd Bk baseline credit assessment on review for downgrade 

--Moody's: Outlook on IndusInd Bank's long-term ratings remain stable

--Moody's: IndusInd Bk's derivatives accounting shows weak internal controls 

--Moody's: IndusInd Bank's potential leadership changes remains a monitorable 

MUMBAI – Moody's Ratings on Monday said it had placed IndusInd Bank's 'Ba1' baseline credit assessment under review for downgrade following the bank's disclosure that it had found some discrepancies in its derivatives portfolio that could have an adverse impact of around 2.35% of the bank's net worth as at the end of December, or about INR 15 billion. Though Moody's Monday said it had reaffirmed its Ba1 rating on IndusInd Bank, the issue with the accounting of derivative transactions is a sign of "inadequate internal controls".

"The impact of the derivatives transactions, coupled with the ongoing stress in the retail unsecured loans, is likely to hurt the bank's profitability, capital and funding, potentially leading to a downgrade of the baseline credit assessment," Moody's said, adding that potential leadership changes at the bank remain a monitorable.

The aforementioned disclosure by IndusInd Bank late on Mar. 10 came after the Reserve Bank of India the previous week approved the reappointment of Sumant Kathpalia as managing director and chief executive officer of the bank for one year as opposed to the requested three years. In a conference call with analysts that day, Kathpalia admitted that the discrepancies found at the bank would have had a bearing on the decision to reappoint him for only one year and the RBI might be "uncomfortable with the way my leadership skills of running the bank is". Earlier, in January, Gobind Jain had resigned as the bank's chief financial officer.

Moody's on Monday said that given the stable outlook on the private sector bank's rating, the rating agency "could consider incorporating a notch of government support, reflecting our assessment of the level of systemic importance of IndusInd, thereby maintaining the Ba1 rating" even in the case of a one-notch downgrade to the baseline credit assessment.

"Although we expect the near-term negative impact on the bank's profitability and capital due to this issue to be manageable, it highlights inadequate internal controls, which is a credit negative," Moody's said.

For the quarter ended December, IndusInd Bank posted a net profit of INR 14.01 billion, down 39% year-on-year. Shares of the lender on Monday ended 0.8% higher at INR 677.40 on the National Stock Exchange. However, the share price is down 25% from its Mar. 10 closing level of INR 900.50. The bank had disclosed the discrepancies to the exchanges post market hours on Mar. 10. End

Reported by Ashna Mariam George 

Edited by Ashish Shirke

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.