NSE places IndusInd Bank under ASM Stage 1 for heightened scrutiny

The National Stock Exchange (NSE) on Thursday (March 13) has placed private lender IndusInd Bank Ltd under the Additional Surveillance Measure (ASM) Stage 1 framework.

This comes after IndusInd Bank on Monday disclosed that the bank has noted some discrepancies in its derivatives portfolio which could have an adverse impact of about 2.35% of the bank’s net worth as of December 2024 as per its internal review.

IndusInd Bank CEO and Managing Director Sumant Kathpalia said that the accounting lapse was noted around September-October last year, and the bank gave a preliminary update to the RBI about this last week. The final number will be known after the external agency, which the bank has appointed, finalises its report by early April.

Also Read: Right before accounting crisis, MFs sold IndusInd Bank shares worth ₹1,600 crore in February

In an analyst call late on Monday night, Kathpalia said that the discrepancy in the derivative portfolio has been accumulated in the book over a period of 5-7 years prior to April 1, 2024. The discrepancy in IndusInd Bank’s treasury business went unnoticed despite multiple audits like that of internal, statutory, and compliance, as well as by the RBI.

What is Additional Surveillance Measure?

Stage 1 Additional Surveillance Measure (ASM) is a regulatory framework used by Indian stock exchanges to monitor and control unusual price movements or volatility in stocks. When a stock is placed in Stage 1 ASM, it undergoes heightened scrutiny, and investors are required to meet a 100% margin requirement for trades.

This measure is designed to mitigate risks and protect market integrity by controlling speculative trading and ensuring stability. Stocks remain under ASM until they no longer exhibit the concerning behaviours or meet the criteria for removal from the framework.

Also Read: Derivative accounting issues may not be limited to IndusInd Bank, says Abizer Diwanji

In stage 1 of the ASM Framework, a requirement of 100% margin is needed and the stock is kept in a daily price band of 5%. When a stock is removed from the ASM Framework, it means that concerns about manipulation or volatility have decreased around the stock.

Shares of Indusind Bank Ltd ended at ₹672.10, down by ₹12.60, or 1.84%, on the BSE.