According to a recent report by The Economic Times, IndusInd Bank, a private lender, has made significant efforts to boost liquidity in the midst of a crisis. This crisis is attributed to accounting gaps in its derivatives books. To alleviate this issue, IndusInd Bank has allegedly struck multiple deals with private banks to transfer highly rated corporate loans.
ICICI Bank and Federal Bank have provided liquidity to IndusInd Bank by acquiring its highly rated corporate loans at an interest rate of 7.5 to 8%. These loans, valued at over Rs 10,000 crore, were acquired through the traditional Inter-Banking Participation Certificate (IBPC) market.
Notably, these bilateral trades between the two banks do not require public reporting. However, sources revealed that IndusInd Bank had been actively pursuing these deals for nearly 10 days. The exact value of these loans is difficult to determine due to the lack of transparency in these private transactions.
IndusInd Bank’s efforts to boost liquidity through these deals are seen as a step towards resolving the challenges it faces in its derivatives book. The bank’s actions demonstrate its commitment to addressing this crisis and maintaining its financial stability. The successful execution of these deals with ICICI Bank and Federal Bank is likely to be viewed as a positive sign, not only for IndusInd Bank but also for the overall banking industry.