Many investors in India are shocked as IndusInd Bank’s share price has dropped significantly, hitting a 52-week low. On March 11, the stock fell by 23% in morning trade, marking its fifth consecutive day of decline. The history of share price of IndusInd Bank is given below.
| Date | Price | Open | High | Low |
|---|---|---|---|---|
| Mar 11, 2025 | 655.95 | 810.45 | 810.45 | 649.00 |
| Mar 10, 2025 | 900.50 | 895.00 | 913.35 | 881.10 |
| Mar 07, 2025 | 936.75 | 971.00 | 976.60 | 932.30 |
| Mar 06, 2025 | 971.70 | 976.00 | 984.10 | 962.20 |
| Mar 05, 2025 | 971.85 | 984.25 | 995.25 | 970.65 |
| Mar 04, 2025 | 987.60 | 978.00 | 1,003.60 | 966.95 |
| Mar 03, 2025 | 984.00 | 978.95 | 986.30 | 947.00 |
| Feb 28, 2025 | 990.10 | 1,040.00 | 1,040.65 | 970.10 |
| Feb 27, 2025 | 1,046.70 | 1,046.90 | 1,063.30 | 1,040.70 |
| Feb 25, 2025 | 1,034.25 | 1,028.20 | 1,041.70 | 1,026.35 |
| Feb 24, 2025 | 1,029.15 | 1,030.10 | 1,038.75 | 1,021.10 |
Main Reason for the Fall
IndusInd Bank is facing a major financial issue related to derivatives transactions, which could reduce its net worth by ₹1,600-2,000 crore. This has raised concerns about hidden risks in the bank’s financial books.
On March 10, the bank revealed that its net worth would drop by 2.35% due to discrepancies in its derivative accounts. This announcement caused panic among investors, leading to a massive sell-off of its shares.
What Are These Discrepancies?
- The issue stems from internal derivative trades that do not comply with new RBI rules, which take effect from April 2024.
- The bank’s CEO, Sumant Kathpalia, said the problems were discovered between September and October last year.
- Deputy CEO Arun Khurana clarified that these issues do not involve customer accounts, but he did not provide full details on the nature of the problem.
Experts Warn About Serious Impact
A report in the Economic Times states that these financial discrepancies hurt the bank’s credibility and damage investor trust.
- Analysts at Macquarie, a global financial firm, said the issue raises doubts about the bank’s internal processes.
- Jefferies, an American investment bank, added that this situation proves weak internal controls at IndusInd Bank.
Why Are Some Investors Always Cautious About Banks?
An expert, explained why banking stocks are risky:
- Banks don’t benefit much from good loans – If a customer succeeds in business, the bank earns the same fixed interest. However, if a customer fails, the bank suffers huge losses.
- Fast-growing banks may have hidden risks – A bank might appear to be growing, but its financial problems often surface only years later.
- Banking is a risky business by nature – Banks deal with highly leveraged (borrowed) money, which makes them vulnerable to financial shocks.
The expert cited global examples to highlight these risks:
- A single trader’s mistake led to the collapse of 200-year-old Barings Bank.
- Silicon Valley Bank (SVB) collapsed due to issues in its bond portfolio rather than bad loans.
Conclusion
The sharp fall in IndusInd Bank’s share price is mainly due to derivative-related financial discrepancies, which have shaken investor confidence. The bank has assured that the issue does not affect customer accounts, but the lack of transparency has raised concerns about its financial management.
Investors are now watching closely to see how IndusInd Bank resolves these issues and whether more hidden risks emerge in the future.
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