Investor confidence in private banks is still intact—for now

Executives say issues at IndusInd, IDFC First, HDFC Bank largely bank-specific, not systemic

- Shayan Ghosh

Historically, private sector banks have commanded stronger valuations.

(MINT)

thas been a testing year for India's private banking sector—IndusInd Bank, IDFC First Bank and even the largest player, HDFC Bank, have faced crises that eroded investor wealth.

Yet they retain investor confidence, with industry executives noting that each crisis is distinct and primarily due to individual errors rather than systemic factors.

"These disconnected issues do not take away the confidence in private banks," said Pratik Shah, partner and national leader, financial services, EY India.

Shah's optimism also stems from stronger regulatory guardrails. He said the regulatory review and oversight process has only got better and more robust over the last few years, and there have been cases where the regulator has not been shy about imposing fines or even shutting down businesses.

"I think the environment around us is becoming more and more complex, and business risks are manifesting themselves in a different manner. I'm not sure I can take this to be a systemic issue in the industry," Shah said.