IndusInd Bank Crisis and RBI’s Stability Role
Why in the news
CRISIL cited the microfinance review and two senior exits for its negative watch, while RBI’s earlier calming statement showed its stability role.
Key facts
- Loss of about 2.35% of capital from the error.
- RBI issued a Saturday statement on the bank’s health, urged depositors to stay calm and told the board to finish corrective steps by Q4 FY25.
| Metric (as of March 9) | Value |
|---|---|
| Capital Adequacy Ratio | 16.46% |
| Provision Coverage Ratio | 70.2% |
| Liquidity Coverage Ratio | 113% (norm 100%) |
Past RBI reassurances
- ICICI Bank, April 2003: liquidity rumours.
- YES Bank, March 2020: moratorium, depositors protected.
- 2020 volatility: Governor Shaktikanta Das said share swings do not reflect deposit safety.
Lender of last resort
- Liquidity for solvent banks in temporary stress, preventing systemic failure.
- Based on Walter Bagehot, Lombard Street.
Significance
- Preserves depositor trust and averts rumour-driven runs.
Exam angle
- Rating agency: CRISIL.