In a regulatory filing on Thursday, the bank said the discrepancy was uncovered following a whistleblower complaint. The Audit Committee had subsequently directed the IAD to examine transactions recorded in both “other assets” and “other liabilities”.
The IAD submitted its findings on May 8, 2025, confirming that Rs 595 crore in “other assets” was unsubstantiated. These balances were later set off against corresponding entries in “other liabilities” in January 2025, the bank said.
The audit also evaluated the actions of key employees linked to the lapse.
This development follows an earlier disclosure on April 22, where the bank had informed exchanges that it was reviewing its microfinance business operations. At that time, global consulting firm EY was brought in to assist the internal audit.
The IAD’s recent report also noted that interest income of Rs 674 crore was incorrectly recorded over three quarters of FY24-25 and later reversed on January 10, 2025.”The Board is taking necessary steps to strengthen internal controls, fix accountability, and will take appropriate action,” IndusInd Bank stated.The latest findings come on top of earlier accounting lapses in the bank’s derivatives portfolio, which were disclosed in March. The irregularities were estimated to have an adverse impact of 2.35% of the bank’s net worth as of December 2024. Subsequently, PwC was appointed to assess the damage and recommend corrective measures.
PwC’s report pegged the total negative impact at Rs 1,979 crore as of June 30, 2024.
In the wake of these developments, CEO Sumant Kathpalia and Deputy CEO Arun Khurana resigned on April 29. A Committee of Executives has been appointed to oversee operations until a new MD & CEO is appointed or for a period of three months.
Meanwhile, the bank’s board has hired Grant Thornton to conduct a forensic audit into the accounting discrepancies, including a review of derivative contract treatment against prevailing accounting standards.
Last week, Moody’s Ratings affirmed IndusInd Bank’s credit rating but revised its outlook to negative, citing risks to the bank’s solvency, funding, and liquidity. It also downgraded the bank’s standalone credit profile from ba1 to ba2, highlighting weaknesses in internal controls, inadequate management oversight, and lack of succession planning following the resignation of senior leadership.
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