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The private bank on Monday said its net worth could take a 2.35% hit to the tune of roughly 1,600 crore as of December 31 on account of underestimation of foreign exchange hedging costs. Analysts said these were internal foreign exchange derivatives based on the bank's forex borrowings and deposits.
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The RBI is examining whether unhedged forex liabilities are an issue specific to IndusInd Bank or a broader banking problem. IndusInd Bank disclosed discrepancies in its derivative portfolio, possibly resulting in significant financial losses. Banks have been instructed to provide detailed hedging information and ensure compliance with guidelines.
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After years, choppy markets have revived the trades on over-the-counter (OTC) currency derivatives as corporates fish around for fancy deals at modest (or, even zero) cost to guard themselves from fluctuations in foreign exchange rates.
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News and Media
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