IndusInd case a rare instance when RBI cited its LOLR role

Central bank can rescue a lender that is solvent but has temporary liquidity woes

- MANOJIT SAHA

In the last 25 years, there were a few instances when the Reserve Bank of India (RBI) made public statements on commercial banks, reassuring their financial health while asking depositors not to panic or react to speculative reports.

The latest lender for which RBI has made an appeal is IndusInd Bank.

An accounting error leading to a loss of 2.35 per cent of its capital, estimated around ₹1,500-2,000 crore, resulted in the stock tanking over 27 per cent last Wednesday.

On Saturday, the RBI made a statement appealing to depositors that there is no need to react to the speculative reports at this juncture while affirming IndusInd's stable financial health. It also added that the bank is being monitored closely by the regulator.

Saturday's statement also highlighted that the RBI has directed the Board and the management of IndusInd to have remedial action completed fully during the current quarter — Q4FY25 — after making the required disclosures to all stakeholders.