In the latest news, RBI has officially released a statement about IndusInd Bank’s Financial Health. The speculations around the stability of Induslnd Bank’s financial health started due to the Rs. 1600 crore impact from a past currency derivative transaction that would potentially impact the bank’s net worth around 2.34%. (A currency derivative transaction is a financial contract where the value is derived from the exchange rate of currency between two countries.) RBI Official Statement on IndusInd Bank’s Financial Health Report, Know what’s in the report.
1. Capital Adequacy Ratio: 16.46%, which is above the regulatory requirement.
Capital Adequacy Ratio (CAR) measures a bank’s financial strength by comparing its capital to its risk-weighted assets. Ensuring that the bank can absorb potential losses and protect depositors.
2. Provision Coverage Ratio: 70.20%, shows the ability to cover its own loss without any problem to them or customers.
Provision Coverage Ratio (PCR) shows how much money a bank has set aside (provisions) to cover potential losses from bad loans, ensuring financial stability.
3. Liquidity Coverage Ratio (LCR): 113%, more than the mandatory 100% requirement
Liquidity Coverage Ratio (LCR) shows the ability of a bank to handle short-term financial emergencies without hassle. They should be having enough liquid assets to cover its cash needs for the next 30 days.
Induslnd Bank also hired an external audit team to review their accounts and finances. Induslnd Bank hired this team to resolve the ongoing issue about the bank’s financial health. RBI advised Induslnd Bank to resolve the issue by the end of ‘Q4 FY25.
“The Reserve Bank would like to state that the bank is well-capitalized and the financial position of the bank remains satisfactory. As per auditor-reviewed financial results of the bank for the quarter ended December 31, 2024, the bank has maintained a comfortable capital adequacy ratio of 16.46 percent and provision coverage ratio of 70.20 percent,” stated the central bank in its press release dated March 15, 2025.
RBI elaborated on the scenario and said, “The Liquidity Coverage Ratio (LCR) of the bank was at 113 percent as of March 9, 2025, as against the regulatory requirement of 100 percent,” stated the central bank in its press release dated March 15, 2025.
“As such, there is no need for depositors to react to the speculative reports at this juncture. The bank’s financial health remains stable and The Reserve bank is monitoring closely, RBI concluded.
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