IndusInd Bank share price jumps over 5% after RBI Governor says lender’s issue should ‘settle down soon’

Mumbai, June 6, 2025 — IndusInd Bank shares rallied more than 5% intraday on Thursday after Reserve Bank of India (RBI) Governor Shaktikanta Das addressed concerns surrounding the private lender, stating that the issue faced by the bank “should settle down soon.” The reassuring remarks from the central bank head triggered a relief rally in the stock, which had been under pressure amid regulatory scrutiny in recent weeks.

RBI’s Comments Soothe Investor Nerves

Speaking at a post-policy press conference, RBI Governor Shaktikanta Das, without naming any specific institution initially, mentioned that the central bank was "closely monitoring" certain developments in the banking sector. Later, when specifically asked about IndusInd Bank, he confirmed that the issue was “being examined” and that “it should settle down soon.”

This prompted a swift and positive response from the market. IndusInd Bank stock, which opened flat, jumped to an intraday high of ₹1,648.35 on the NSE, registering a gain of over 5.4% before paring some gains. The stock eventually closed 4.8% higher at ₹1,640.20, compared to a 0.6% gain in the benchmark Nifty Bank index.

Market Context: Regulatory Woes Weighing on Stock

IndusInd Bank had recently come under scrutiny after reports emerged regarding alleged governance lapses and regulatory compliance issues related to its microfinance subsidiary. While the RBI has not issued a formal statement outlining any punitive actions, investor sentiment was rattled due to the speculative nature of the reports.

Over the past month, the bank’s stock had corrected more than 8%, underperforming both the Nifty 50 and the Nifty Bank indices. However, the RBI Governor’s intervention appears to have provided much-needed clarity and confidence to jittery investors.

Analysts Turn Positive but Advise Caution

Several analysts welcomed the RBI Governor’s reassuring tone but remained cautious about the stock’s short-term trajectory.

“The Governor’s comments serve as a confidence booster, signaling that the issue is not systemic in nature,” said Siddharth Khemka, Head of Retail Research at Motilal Oswal Financial Services. “While the long-term fundamentals of IndusInd Bank remain intact, we would advise investors to monitor regulatory developments closely.”

Meenakshi Ghosh, Banking Sector Analyst at ICICI Securities, added, “Given that the central bank has not issued any show-cause or penalty notices, the market reaction appears driven largely by fear rather than facts. The stock could continue its upward momentum if further clarification emerges from the bank or RBI.”

Investor Outlook: Recovery on the Horizon?

The sharp rebound in IndusInd Bank's stock may indicate that the worst of the negative sentiment is behind it, especially if no further adverse developments arise. Analysts believe that at current valuations, the stock offers an attractive risk-reward profile, provided regulatory overhangs are resolved soon.

From a fundamental perspective, the bank has shown strong performance in its recent quarterly earnings, reporting healthy growth in net interest income and asset quality improvements. The lender also continues to maintain a strong capital adequacy ratio, which further strengthens its investment case.

However, investors should be mindful of the external uncertainties and await further updates from both the RBI and the bank's management. Any official communication or clean chit from the regulator could catalyze a more sustained rally.

Broader Banking Sector Sentiment Improves

The RBI’s accommodative stance in its latest monetary policy review also buoyed banking stocks, with most private sector lenders ending the day in the green. Easing inflation, robust credit growth, and expectations of a stable interest rate regime contributed to the positive outlook for the sector.

The Nifty Bank index closed up 0.6%, with IndusInd Bank leading the gains, followed by ICICI Bank and Axis Bank.

The surge in IndusInd Bank’s stock on the back of RBI Governor Shaktikanta Das’s comments marks a pivotal moment in restoring investor confidence in the bank. While uncertainties remain, the central bank’s assurances have helped calm nerves in the market. Going forward, investors will closely track further developments to assess whether the regulatory clouds fully clear.