IndusInd Bank’s stock plummeted 27% on Tuesday, hitting its lowest level in nearly five years after the bank reported accounting discrepancies in its derivatives portfolio. The sudden crash wiped out almost ₹965 crore from Life Insurance Corporation’s (LIC) holdings, dealing a major blow to India’s largest life insurer.
An internal review at IndusInd Bank uncovered discrepancies in account balances related to derivatives, following new RBI regulations that took effect in April 2024. The bank estimated a 2.35% hit to its net worth, amounting to a ₹2,000-2,100 crore impact. Analysts predict the loss will reflect in Q4FY25 earnings, potentially pushing the bank into a quarterly loss.
As IndusInd Bank shares tumbled to ₹654, LIC’s stake value dropped to ₹2,434 crore from ₹3,398 crore in a single day. Other major investors, including Kotak Mutual Fund, ICICI Prudential MF, and UTI MF, also faced losses.
Several brokerages downgraded IndusInd Bank’s stock, citing weak operational performance and governance concerns. In the past year, the stock has lost over 55% of its value, making it one of the worst performers in the Nifty 50 index.
Investors now await further clarity from the bank as markets digest the shockwaves of this financial setback.
