On March 11, 2025, IndusInd Bank, a prominent private sector lender in India, experienced a dramatic 25% plunge in its share price, marking its steepest single-session decline since March 2020. This sharp downturn was triggered by the bank’s disclosure of accounting discrepancies related to forex derivatives, which could result in a one-time earnings hit estimated between ₹1,500 crore to ₹2,000 crore.
The recent issues with the IndusInd Bank crash stem from a problem with accurately fixed costs exceeding the bank’s actual spending on past forex deals. This problem became apparent after the new fiscal control regulations came into effect in April 2024 which required the bank to balance its books with its open derivative contracts.
The estimation of these derivatives was admitted by the bank’s Chief Executive Officer Sumant Kathpalia as having occurred from September to October 2024 which implies that the problem was lingering for some time before it was fixed.
The internal controls within the bank have been brought under immense scrutiny which some have argued will lead to dire 2024-2025 earnings and further decimation of the bank’s stock value. Following an earnings miss from the bank in October 2024, the stock has already nose-dived 46% in a few months.
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This unforeseen IndusInd Bank crash has affected the most mutual funds, which have invested heavily in IndusInd Bank. The mutual funds lose of ₹6,000 crore is a case in point regarding the risks associated with a heavy concentration in investments. It highlights the necessity of proper risk assessment and diversification of portfolios in cases involving systemic failures of corporate governance. The mutual funds lose due to the IndusInd Bank crash showcases the high risk involved in single-stock dependence.
Overview of how various banks were influenced:
Private Sector Banks
This case demonstrates the risk of a single point of failure, which can be devastating for a large population of investors and funds. IndusInd bank crash illustrates the need to focus on managing business risks and pay attention to diversifying investment portfolios to safeguard them from tangentially related corporate governance failures. The mutual funds lose ₹6,000 crore due to the IndusInd Bank crash highlights how crucial it is to minimize risk exposure in financial investments. The modern world is fraught with complexity, and we as participants need to remain on guard and the offensive searching for new dangers.
The already fragile investor confidence has been dealt another blow with the 25% of IndusInd Bank crash in share price, causing a mutual funds lose of ₹6,000 crores and showing frightening results of poor corporate governance. The mutual funds lose because of the IndusInd Bank crash does require the bank to become proactive in building trust and enhancing the level of transparency offered to investors and stakeholders by implementing corrective actions.
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If you want to know more about Risk Management & Intraday Trading Strategies you can refer to our previous blog on
Importance Of Risk Management In Trading and 10 Best Intraday Trading Strategies.
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