Indian private lender IndusInd Bank (INBK.NS) said on Monday it expects a 2.35% decline in its net worth as of December 2024 due to discrepancies in its derivative accounts found during an internal review.
The Mumbai-based lender said the net worth impact emerged from internal derivative trades, which were not in compliance with rules enforced by the Reserve Bank of India from April 2024.
The discrepancies are not linked to client accounts, deputy CEO Arun Khurana said on a conference call, without disclosing details on the nature of the inconsistencies.
"Effective April 1, we can confirm that there will be no internal trades in our book; we have not entered into any internal trades," Khurana said on the call.
"The internal trades that were there prior to that period which were existing before April 1 have been unwound and all according mark-to-markets taken."
In September 2023, the central bank had revamped rules that govern the investment portfolio of commercial banks.
The discrepancies in the derivatives book were identified by September-October, IndusInd CEO Sumant Kathpalia said on the call.
IndusInd has appointed an external agency to independently review and validate the internal findings, the lender said in a stock exchange filing earlier in the day.
The bank's profitability and capital adequacy remain healthy to absorb this "one-time impact," it added.
The 2.35% impact on the bank's net worth is an internal estimation and may not be very different from what the external agency finds, Kathpalia said.
IndusInd has also looped the RBI on the issue and that could have had a bearing on the regulator's decision to give a shorter extension for the CEO's post, Kathpalia added.
The private lender last week received approval from the RBI to reappoint Kathpalia as CEO for one year, shorter than the board's approval and the central bank's typical three-year extension.
