India city Mumbai virus covid-19 testing Government India city Mumbai

A battered IndusInd Bank lays bare RBI's financial stability challenge

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MUMBAI: India’s private sector banks are facing their toughest test yet, with a virus outbreak putting their earnings at risk even as the collapse of a peer has raised serious questions over deposits.

IndusInd Bank is the worst hit right now. The bank’s stock has slumped over 10% so far Tuesday after it revealed, in an investor call, that it has lost 10% of its deposits since peer Yes Bank went belly up earlier this year.

That is a big jump from the 2% erosion the bank had indicated just two weeks ago. The reason is that state governments no longer think it is safe to keep money in the bank.

What is making it worse for the bank is its exposure to vulnerable sectors in the wake of the lockdown to check the spread of covid-19.

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