Crisil puts IndusInd Bank bonds on watch

Mumbai

Global rating agency Crisil has placed IndusInd Bank’s long-term debt instruments under a negative watch. This includes ₹4,000 crore in Tier II bonds and ₹1,500 crore in infrastructure bonds.

The move follows recent issues at the bank, raising concerns about its internal controls and management. Two top executives resigned, and the internal audit team is now reviewing the bank’s microfinance division after some concerns came up during account finalisation.

Back in March, the bank admitted to problems in how it recorded some derivative trades. These issues increased doubts about its financial reporting.

Although the bank’s overall deposits have stayed stable, deposits from retail and small businesses have dropped. As of March 31, total deposits stood at ₹4.11 trillion, slightly up from ₹4.09 trillion on December 31. However, the CASA ratio dropped from 34.9% to 32.8%, and retail and small business deposits fell from ₹1.89 trillion to ₹1.85 trillion.

Crisil says it will keep watching how the bank handles its internal issues and whether it can regain depositors’ trust. The bank had revealed that a review found a 2.35% drop in its net worth due to derivative trade errors as of December 2024.

PwC reviewed the matter and found a ₹1,979 crore loss by June 2024. An independent review by Grant Thornton confirmed the errors came from wrongly recorded early derivative trade closures.

In total, the mistakes led to a ₹1,959.98 crore hit by March-end. Still, Crisil noted that the bank's capital strength before losses was strong enough to handle the impact.