By Dharamraj Dhutia
MUMBAI (Reuters) – India’s IndusInd Bank raised 110 billion rupees ($1.27 billion) via short-term notes, but at slightly higher rates, in its first fundraising since reporting an accounting discrepancy last week, three merchant bankers said on Tuesday.
The private lender, on Monday, sold certificates of deposits (CDs) maturing in three months to one year, with clearing house data showing the total amount equaled around 50% of the bank’s outstanding CDs.
IndusInd sold three-month CDs at 7.80% to raise 15 billion rupees, while selling five-month to one-year paper at a yield of 7.90%.
The bank did not immediately reply to a Reuters email seeking comment.
The yield on the latest sale was higher than the 7.75% yield for 18.50 billion rupees worth of one-year CDs IndusInd sold last Monday.
That sale was hours before the Mumbai-based lender reported it had discovered an accounting discrepancy in the way it booked currency derivatives stretching back at least six years, with an estimated impact of $175 million.
That compounded worries for the bank’s stock which was already under pressure after the central bank gave CEO Sumant Kathpalia a shorter-than-requested extension.
Moody’s Ratings has placed the bank’s baseline credit assessment (BCA) under review for downgrade due to concerns over “inadequate internal controls”.
“Overall rates have remained stable over the last one week but IndusInd Bank had to pay some premium because of the negative news around the bank,” one of the bankers said, requesting anonymity.
Most of the CDs were subscribed by mutual funds, the bankers added.
Private lender HDFC Bank had raised one-year funds at 7.63% this week and in the previous week, while state-run lender Indian Bank raised similar maturity funds at 7.61% last week, and 7.57% this week. ($1 = 86.5240 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Savio D’Souza)
