ICAI Launches Probe into IndusInd Bank’s Accounting Irregularities Amid Derivative Losses
The Institute of Chartered Accountants of India (ICAI) has begun a study of IndusInd Bank’s financial accounts for fiscal years 2023-24 and 2024-25. This move comes after claims of accounting problems related to the bank’s foreign exchange derivatives portfolio.
ICAI President Charanjot Singh Nandal acknowledged the situation, noting that the review attempts to analyze any anomalies or irregularities in the bank’s financial reporting based on the allegations expressed.
Financial analysts investigating IndusInd Bank accounting irregularities”
Derivative Accounting Lapses Lead to Significant Losses
IndusInd Bank stated that erroneous accounting of internal derivative deals, particularly those with early termination, resulted in notional profits and accounting problems.
Grant Thornton, nominated by the bank’s board, estimated a cumulative adverse accounting impact on the profit and loss account of ₹1,959.98 crore as of March 31, 2025.
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Internal derivative trades between the asset-liability management desk and the treasury employed accrual accounting, whereas trades with external counterparties were marked to market.
This mismatch allowed IndusInd to delay losses internally while prematurely registering gains externally, resulting in overstated earnings.
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PwC’s external audit found that the bank’s derivative discrepancies had a negative impact of ₹1,979 crore on its net value as of December 2024, representing a 2.27% decline.
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Regulatory Actions and Internal Measures
In reaction to these findings, the Reserve Bank of India (RBI) has barred internal derivative dealings from April 1, 2024. IndusInd Bank has since discontinued such internal trades and is working to improve internal controls and ensure compliance with accounting standards.
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Grant Thornton’s forensic audit found 25 people, including top executives in the treasury department, who were accountable for the accounting errors. The bank is exploring appropriate actions, including possible termination and reassignment, depending on the results.
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Financial analysts investigating IndusInd Bank accounting irregularities”
Market Impact and Investor Concerns
Following the exposure of these accounting irregularities, IndusInd Bank’s stock fell more than 25% in a single day.
The bank recorded a net profit of ₹1,401 crore in the December quarter of FY25, but accounting irregularities and losses have aroused investor concerns.
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The ICAI’s evaluation emphasizes the gravity of the charges and the organization’s commitment to maintaining openness and accountability in financial reporting in the banking industry.
The conclusion of this assessment could have a substantial impact on the bank’s governance and regulatory status.