India’s IndusInd Bank says worst is over

MUMBAI: IndusInd Bank Ltd, which saw a fifth of its market value wiped out over the past week on concern about its creditors, says the crisis of confidence engulfing India’s financial system is fading away.

Outstanding loans to overstretched borrowers dipped at the Mumbai-based bank last quarter, lenders including IndusInd are working to resolve defaults at Dewan Housing Finance Ltd, and Indian authorities are taking steps to contain future delinquencies at shadow banks, IndusInd’s chief executive officer Romesh Sobti said in an interview in Mumbai.

“All we need now to turn the tide of caution completely is a resolution of a large delinquent account, ” Sobti said. “Banks are already beginning to look more positively at lending to non-bank financiers and the real estate segment as the worst is behind us.”

IndusInd joins Axis Bank Ltd and Edelweiss Financial Services Ltd in predicting that the Indian financial sector’s woes will ease soon. Most banks have been beaten down for more than a year since the collapse of Infrastructure Leasing & Financial Services Ltd and defaults by other shadow lenders including Dewan and Altico Capital India Ltd.

Shares of IndusInd have fallen about 20% over the past week amid speculation that it was owed money by Indiabulls. As of Sept 29, gross exposure to the housing finance company concerned, its units and associate finance companies stands at about 0.35% of the loan book and is backed by adequate collateral, IndusInd said in a Sept 30 filing without naming any firm. — Bloomberg

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