Private lender IndusInd Bank said major accounting discrepancies worth Rs 2,600 crore may have been possible due to a fraud involving senior executives and former key management personnel. The revelations were made during the audit of the bank’s financial results for the quarter and year ended March 2025.
According to the bank’s audited financial statements and internal audit reports, the issues stem from incorrect accounting of internal derivative trades, artificially inflated fee and interest income from its microfinance portfolio, and unsubstantiated entries in “Other Assets” and “Other Liabilities” accounts.
One of the largest adjustments involved the write-off of Rs 1,960 crore of notional profits from internal trades, accumulated since FY16. The audit also uncovered incorrect booking of Rs 673.82 crore as interest income and Rs 172.58 crore as fee income over three quarters, which was reversed in the fourth quarter of FY25. Additionally, another Rs 595 crore in misclassified asset and liability entries was netted off in the books.
IndusInd Bank said the internal investigation revealed that senior officials had overridden internal financial controls and concealed improper accounting practices from the board and auditors for several years.
Following these findings, the joint statutory auditors of the bank filed a formal report with the central government, indicating suspected offences involving fraud.
The bank confirmed that it has now reflected all the necessary corrections in its FY25 results and is cooperating with regulators. "The Board has initiated steps to determine individual accountability and is in the process of implementing recommendations from internal and external experts to improve oversight, strengthen financial controls, and avoid recurrence," the bank stated.
IndusInd Bank reported a consolidated net loss of Rs 2,329 crore in its Q4FY25 versus a net profit of Rs 2,349 crore in the year ago period period amid losses in its derivatives segment. The private lender reported net interest income of Rs 3,048 crore in Q4FY25 which was down 43% YoY versus Rs 5,376 crore reported in the year ago period.
On Friday, the Bank's shares fell 2% to Rs 767 on NSE.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
According to the bank’s audited financial statements and internal audit reports, the issues stem from incorrect accounting of internal derivative trades, artificially inflated fee and interest income from its microfinance portfolio, and unsubstantiated entries in “Other Assets” and “Other Liabilities” accounts.
One of the largest adjustments involved the write-off of Rs 1,960 crore of notional profits from internal trades, accumulated since FY16. The audit also uncovered incorrect booking of Rs 673.82 crore as interest income and Rs 172.58 crore as fee income over three quarters, which was reversed in the fourth quarter of FY25. Additionally, another Rs 595 crore in misclassified asset and liability entries was netted off in the books.
IndusInd Bank said the internal investigation revealed that senior officials had overridden internal financial controls and concealed improper accounting practices from the board and auditors for several years.
Following these findings, the joint statutory auditors of the bank filed a formal report with the central government, indicating suspected offences involving fraud.
The bank confirmed that it has now reflected all the necessary corrections in its FY25 results and is cooperating with regulators. "The Board has initiated steps to determine individual accountability and is in the process of implementing recommendations from internal and external experts to improve oversight, strengthen financial controls, and avoid recurrence," the bank stated.
IndusInd Bank reported a consolidated net loss of Rs 2,329 crore in its Q4FY25 versus a net profit of Rs 2,349 crore in the year ago period period amid losses in its derivatives segment. The private lender reported net interest income of Rs 3,048 crore in Q4FY25 which was down 43% YoY versus Rs 5,376 crore reported in the year ago period.
On Friday, the Bank's shares fell 2% to Rs 767 on NSE.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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