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.In the fourth quarter, the lender reported a net loss of Rs 2,236 crore as against a profit of Rs 2,346 crore a year ago. Meanwhile, its net interest income fell 43% YoY to Rs 3,048 crore.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)