IndusInd Bank’s BCA tied to asset quality, liquidity: Moody’s

Global rating agency Moody’s, which is currently reviewing IndusInd Bank’s risk management practices and leadership stability, indicated that a one-notch baseline credit assessment (BCA) downgrade could be offset by incorporating government support, reflecting IndusInd’s systemic importance, thereby preserving the Ba1 rating.

To maintain its current BCA, Alka Anbarasu, Associate Managing Director, Moody’s Ratings, said the agency expects IndusInd to stabilise asset quality, profitability, and capital while ensuring steady funding and liquidity.

The bank must also address deficiencies in financial controls and resolve uncertainties surrounding senior leadership, she said, during an interaction with Moneycontrol.

“The financial impact of the derivatives losses is quite manageable considering IndusInd Bank’s strong capital. But it is really the risk management capabilities of the bank, which is what we are watching out for in terms of the review,” Anbarasu said.