IndusInd Bank accounting lapses: Board suspects staff involvement in fraud, asks lender to report to investigative agencies

The bank board met on Wednesday to approve the financial results for the March quarter and the 2024-25 fiscal year.

"Accordingly, the Board has directed necessary steps be taken under applicable law (including reporting to regulatory authorities and investigative agencies) and to also fix accountability of all persons responsible for these lapses," it said.

The bank has appropriately accounted for and reflected the impact of all discrepancies identified in these reports while finalising the financial results for the quarter/twelve months ended March 31, 2025, the lender added.

In March, the private sector bank had reported accounting lapses in the derivative portfolio, which were estimated to have an adverse impact of approximately 2.35% of the bank's net worth as of December 2024.

Following this, the bank appointed the external agency PwC to assess the impact on the bank's balance sheet and lapses at various levels and suggest remedial action.

The agency in its report has quantified the negative impact of the above as of June 30, 2024, at ₹1,979 crore.

On April 29, CEO Sumant Kathpalia and Deputy CEO Arun Khurana resigned from the bank, following which the IndusInd Board appointed a Committee of Executives to oversee the operations of the bank until a new MD & CEO assumes charge or a period of three months.

Separately, the bank's internal audit department (IAD) has found "unsubstantiated balances" of ₹595 crore in "other assets" of its balance sheet.

The IAD also reviewed the bank's microfinance portfolio and found that a cumulative amount of ₹674 crore was incorrectly recorded as interest over three quarters of FY24- 25.