IndusInd Bank shares: Who is behind discrepancies? Lender says fixing accountability

IndusInd Bank Ltd shares are in focus this morning following the bank's disclosure that recent accounting discrepancies in its derivatives portfolio stemmed from incorrect accounting of internal derivative trades, particularly in cases of early termination. These misstatements led to the recording of notional profits, identified as the primary cause of the discrepancies.

The private sector lender engaged an independent professional firm to conduct a comprehensive investigation into the matter. The firm reviewed the roles and actions of key employees involved.

“The board is taking necessary steps to ensure accountability for those responsible for the lapses and is realigning the roles and responsibilities of senior management,” the bank stated.

The investigation firm submitted its findings to the bank on April 26, 2025. It estimated the cumulative adverse accounting impact on the Profit and Loss (P&L) statement at Rs 1,959.98 crore as of March 31, 2025—consistent with the preliminary figure disclosed on April 15.

IndusInd Bank confirmed that it will reflect the impact of these discrepancies in its financial statements for FY 2024–25 and will implement measures to strengthen internal controls. Notably, the bank discontinued internal derivative trades effective April 1, 2024.

IndusInd Bank shares hit a 52-week low of Rs 605.40 on March 12 but recovered later. The stock has gained 26 per cent in the past one month, trimming its one-year losses to 44.86 per cent. 

Recently the stock was again in news after IndusInd Bank admitted it was conducting a review of the bank’s MFI business to examine "certain concerns" that have been brought to the bank’s attention. Addressing speculation, the bank clarified that it has not engaged Ernst & Young (EY) for a forensic audit, contrary to reports by some media outlets. Instead, the bank stated that EY is supporting the finalisation of accounts as part of the Internal Audit Department’s (IAD) routine procedures.

Based on findings from an external agency, IndusInd Bank has assessed a post-tax adverse impact of 2.27% on its net worth, attributable to the identified discrepancies. This figure aligns closely with an earlier internal estimate that projected a potential adverse impact of approximately 2.35% as of December 2024.

Amid these developments, the Reserve Bank of India (RBI) recently reaffirmed the bank’s financial stability. In an official statement dated March 15, the central bank stated that the lender’s financial position remains sound and is being continuously monitored, urging depositors not to be influenced by speculative reports.

In a related development, the RBI has approved only a one-year extension for the tenure of IndusInd Bank’s CEO, as opposed to the three-year term originally proposed.

Commenting on the situation, Macquarie noted, “Focus now shifts to the forensic audit report due from another external agency, where the objective is to determine the root cause and accounting implications of the discrepancies.”