IndusInd Bank’s promoters have redeemed all pledged shares to repay a foreign bank loan, as the private-sector lender attempts to soothe investors’ concerns to arrest a steep slide in its shares.
The bank said in a stock-exchange filing on Wednesday that Induslnd Ltd, a Mauritius-based promoter group entity, has fully repaid the loan to Citibank and has become debt-free.
As a result, Citibank will release the pledge of 23.8 million shares—amounting to a 3.43% stake—of IndusInd Bank. The shares were pledged against a loan availed in September 2016.
IndusInd Ltd and another promoter group entity, IndusInd International Holdings Ltd, own a 14.68% stake in the bank. Both are part of the diversified Hinduja Group.
Last month, the bank’s promoters had proposed to increase their stake to assure investors of the lender’s financial stability. Currently, the Reserve Bank of India doesn’t allow promoters to hold a stake of more than 15% in a bank.
Investors have hammered IndusInd Bank’s stock over the past couple of months as a slowing economy, Yes Bank’s collapse and the coronavirus pandemic have raised fears over its ability to tackle a possible rise in bad loans.
Since January, the bank’s shares have slumped by over 75%. The shares rose 11% on Wednesday morning before reversing the gains to fall 2% at Rs 343.75 in late afternoon trade.
The bank, in which Singapore sovereign wealth fund GIC owns a 2.03% stake, saw a change of guard last month with Sumant Kathpalia taking over as its managing director and chief executive officer from long-time CEO Romesh Sobti.
