New Delhi, March 12 -- The biggest single-day fall in the price of IndusInd Bank shares on Tuesday, 11 March, wiping out more than a quarter of its market value, raises a number of questions. The sharp sell-off followed the lender's disclosure of accounting discrepancies related to its derivative trades, triggering a spate of analyst downgrades.

The fact that the banking sector's regulator, the Reserve Bank of India (RBI), chose to approve only a one-year extension for the bank's CEO, rather than the three years sought by its board, and that too without explaining why, did not help matters.

Fortunately for IndusInd Bank and for our banking system at large, the panic was contained to the stock market and the bank's investors. Its deposit...