IndusInd Bank to Raise ?30,000 Crore via Debt-Equity Mix to Rebuild Confidence After Accounting Lapse

Mumbai – IndusInd Bank, backed by the Hinduja family, has announced plans to raise up to ?30,000 crore through a combination of debt and equity instruments. The decision was approved by the bank’s Board of Directors on Wednesday as part of efforts to restore market confidence following a recent ?2,000 crore accounting discrepancy.

The bank aims to raise ?20,000 crore through debt securities via private placements or in equivalent foreign currencies, and an additional ?10,000 crore through equity instruments such as American Depository Receipts (ADRs), Global Depository Receipts (GDRs), and Qualified Institutional Placements (QIPs).

In a significant governance update, the bank will also amend its Articles of Association, pending Reserve Bank of India (RBI) approval, to allow the Hinduja family to appoint two non-executive, non-independent directors to the board. This marks the first time the UK-based promoters will have formal representation on IndusInd’s board.

The decision comes in the wake of a major financial oversight earlier this year, when IndusInd Bank disclosed a ?2,000 crore misstatement linked to its internal derivatives portfolio. External auditors were brought in to assess the impact and uncover the cause. The revelation led to a sharp reduction in the bank’s net worth.

Taking responsibility for the lapse, CEO Sumath Kathpalia resigned in April, just a day after former Deputy CEO Arun Khurana exited the bank.

As a result of these developments, the Mumbai-based lender reported a net loss of ?2,328 crore in the January–March quarter. Its Net Interest Income (NII) dropped 43.4% year-on-year to ?3,048 crore, weighed down by accounting issues and stress in its microfinance loan book.

The bank’s asset quality also declined. Gross Non-Performing Assets (GNPA) rose to 3.13%, up from 2.25% in the previous quarter. Net NPAs climbed to 0.95% from 0.68%.

The capital raise and governance reforms are seen as a critical step in stabilizing operations and reinforcing investor trust.

With inputs from IANS