Why are investors losing confidence in IndusInd Bank?
Why are investors losing confidence in IndusInd Bank?
Shares of Mumbai-based private sector IndusInd bank fell by up to 25% on tuesday and reached a 52-week low of Rs 674.55. This is the biggest fall in the bank's shares in a day since november 2020. Now the question arises, why are the bank's shares falling? Let's know.
There was a discrepancy in forex hedging
IndusInd bank has disclosed an accounting discrepancy in its derivatives portfolio, due to which its stock has fallen by up to 20%. An internal review has revealed that the bank had underestimated the hedging costs associated with previous foreign exchange (forex) transactions. Profits were overstated in previous quarters due to discrepancies in forex hedging. Investors' confidence in the bank decreased
This disclosure can have an impact of up to Rs 1,600-2,000 crore on the net worth of the bank. Based on the data of december 2024, it can have a negative impact of up to 2.35 percent on the net worth of the bank. After this disclosure, investors' confidence in the bank has decreased rapidly, due to which the stock has reached its lowest level since november 2020. The bank's shares have already fallen by up to 42 percent in the last one year.
Stocks also fell on Monday
Meanwhile, the bank has appointed an external agency to investigate the facts found in the internal review. Now the final report is awaited. The bank has also said that it is ready to deal with this impact on the net worth. Let us tell you that this review was done after the new guidelines on derivative portfolio issued by the bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW">reserve bank of india (RBI) in september 2023. The bank disclosed the issue after its board meeting on march 10. The bank's stock fell 4 per cent on monday after the Reserve bank approved extending the CEO's term by one year instead of the previous three years.