IndusInd Bank ramped up its efforts to mobilise certificates of deposit in March and has raised more than Rs 16,500 crore of CDs during the month, so far, data published by Clearing Corporation of India (CCIL) shows.
Compared to previous months’ averages for FY25, which were in the range of Rs 2,000 crore – 3,000 crore a month till February, CD issuances in March spiked nearly 5.5 times.
The reliance on CDs may possibly be to counter an outflow in deposits after the Mumbai-based bank revealed accounting lapses in derivative instruments earlier this month, sources in the banking fraternity said.
The bank may have seen an outflow of Rs 15,000 crore–Rs 20,000 crore of deposits from March 10, when it made the lapses public, the sources said.
As of December 31, IndusInd Bank's deposits stood at Rs 4,09,438 crore.
An email sent to the bank seeking its response on the matter remained unanswered till publishing the article.
Within days of these lapses coming to light, the Reserve Bank of India issued a statement on March 15 that IndusInd Bank remains "well-capitalised and the financially position remains satisfactory".
The central bank’s statement doesn’t seem to have allayed depositors’ concern entirely.
IndusInd Bank isn’t having it easy when it comes to raising fresh deposits, especially since March 11. “Garnering of fresh deposits has been a bit of a challenge for the bank from mid-March,” a senior executive of a private bank said on condition of anonymity.
With challenges persisting on the deposits front, the bank is said to be relying more on CDs to ease any potential pressure on the liabilities front.
On March 18, Moneycontrol reported that CD issuances of IndusInd Bank may have been subscribed extensively by public sector banks. However, having priced these instruments attractively, higher by 10–15 basis points (bps) compared to banks, may also have helped IndusInd Bank.
CDs are issued by scheduled commercial banks and selected financial institutions to individuals, corporations, companies and funds and others usually to shore up deposit base.
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