Is IndusInd Bank Raising Rs 30,000 Crore Through Debt and Equity?
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Synopsis
IndusInd Bank's recent board decision to raise Rs 30,000 crore through debt and equity comes on the heels of a significant accounting lapse. This strategic move aims to restore confidence and stabilize the bank's operations amidst financial turmoil and leadership changes.
Key Takeaways
- IndusInd Bank aims to raise Rs 30,000 crore to stabilize operations.
- A mix of debt and equity will be utilized for this funding.
- The Hinduja family is set to appoint two directors to the bank's board.
- A recent accounting error resulted in a loss of Rs 2,000 crore.
- Net losses for the last quarter amounted to Rs 2,328 crore.
Mumbai, July 23 (NationPress) The Board of Directors of IndusInd Bank, backed by the Hinduja family, has officially approved a plan to raise as much as Rs 30,000 crore through a blend of debt and equity. This decision comes as the bank aims to rebuild trust in its operations following a recent accounting discrepancy amounting to Rs 2,000 crore.
The financial institution intends to secure Rs 20,000 crore via debt instruments through any permissible methods on a private placement basis, or in equivalent foreign currencies. Additionally, it will enhance its capital structure by issuing securities such as American Depository Receipts, Global Depository Receipts, and Qualified Institutional Placement totaling Rs 10,000 crore.
Once approved by the RBI, the bank will amend its Articles of Association to permit its promoters, the Hinduja family, the authority to appoint two non-executive, non-independent directors to the bank’s board.
The Hinduja family, based in the UK, had not previously held any positions on the board but can now nominate these directors.
Earlier this year, IndusInd Bank disclosed accounting errors concerning its derivatives portfolio. An external agency was appointed to evaluate the financial repercussions, which were later determined to be around Rs 2,000 crore, as well as to identify the source of these errors. The bank's net worth suffered significantly due to the revelation of misaccounting related to internal derivative trades.
In light of these lapses, the bank’s CEO, Sumath Kathpalia, took moral responsibility and resigned in April, just after the departure of former deputy CEO, Arun Khurana.
The private lender based in Mumbai reported a net loss of Rs 2,328 crore during the January-March quarter, impacted by accounting issues and challenges in its microfinance sector.
IndusInd's Net Interest Income (NII), representing core income, plummeted by 43.4% compared to the same quarter the previous year, landing at Rs 3,048 crore.
The bank's asset quality also faced deterioration on a sequential basis, with Gross NPAs climbing to 3.13% of total loans from 2.25% in the prior quarter, while net NPAs stood at 0.95%, rising from 0.68% in the earlier quarter.
Point of View
IndusInd Bank's decision to raise funds through a combination of debt and equity reflects a proactive approach to managing recent challenges, particularly the fallout from accounting discrepancies. The involvement of the Hinduja family in governance may bring renewed stability and confidence, yet the bank must address underlying issues to ensure long-term recovery.
NationPress
24/07/2025
Frequently Asked Questions
What is IndusInd Bank's plan to raise funds?
IndusInd Bank plans to raise up to Rs 30,000 crore through a combination of debt and equity, including Rs 20,000 crore via debt securities and Rs 10,000 crore through securities issuance.
Who can appoint directors on IndusInd Bank's board?
The Hinduja family can now nominate two non-executive, non-independent directors to IndusInd Bank's board following the board's approval.
What triggered the need for this funding?
The need for funding was triggered by a recent accounting lapse that resulted in a loss of Rs 2,000 crore, impacting the bank's operations and trust.
What is the current financial status of IndusInd Bank?
IndusInd Bank reported a net loss of Rs 2,328 crore for the January-March period, with significant declines in its Net Interest Income and deteriorating asset quality.
