IndusInd Bank Uncovers ₹674 Crore Interest Misstatement in Audit Review
| 2025-05-16
Representative Image
IndusInd Bank's internal audit reveals ₹674 crore wrongly booked as interest income and ₹595 crore in unexplained assets, prompting internal controls review.
Interest Income Misstated Across Three Quarters
IndusInd Bank confirmed on Thursday that an internal audit had uncovered that ₹674 crore had been erroneously classified as interest income over three quarters in the 2025 financial year. The discrepancy, identified by the bank’s Internal Audit Department (IAD), was reversed on 10 January 2025.
The audit was initiated following earlier concerns raised about the bank’s microfinance operations. In a stock exchange filing, IndusInd Bank stated that the internal review was first disclosed on 22 April. The subsequent report, submitted by the IAD on 8 May, detailed the misclassification and led to further examination of related transactions.
Whistleblower Complaint Prompts Additional Probe
In parallel, the bank also responded to a whistleblower complaint concerning transactions under its "Other Assets" and "Other Liabilities" accounts. The IAD’s review uncovered ₹595 crore in unsubstantiated balances recorded under "Other Assets," which were reportedly offset by corresponding liabilities in January.
The bank said, “The IAD has also examined the roles and actions of key employees in this context,” noting that further disciplinary or corrective measures could follow pending the board's decisions.
Board Commits to Stronger Controls
IndusInd Bank’s board of directors has pledged to strengthen internal governance mechanisms. The bank assured shareholders that it is “taking necessary steps to enhance internal controls and establish accountability for those responsible.”
While the bank has stated that these issues are not expected to materially impact its balance sheet, the revelations highlight growing scrutiny over the lender’s financial reporting processes.
Previous Disclosures and Resignations
This is the latest in a series of internal concerns flagged at the private sector lender. In March 2025, IndusInd Bank reported losses of ₹1,960 crore linked to accounting lapses in its derivatives trading business.
Amid these investigations, the bank saw the resignation of key executives. Chief Financial Officer Gobind Jain stepped down in January, citing external opportunities. In April, both Chief Executive Officer Sumant Kathpalia and Deputy CEO Arun Khurana resigned with immediate effect.
Microfinance Operations Under Review
Sources familiar with the matter have indicated that IndusInd Bank’s board had paused new customer onboarding for its microfinance division since January 2025. For much of the March quarter, the bank also stopped underwriting new microfinance loans sourced by Bharat Financial Inclusion Ltd (BIFL), its dedicated microfinance unit.
This operational pause reportedly followed feedback from the Reserve Bank of India (RBI), the country’s central banking authority, amid ongoing concerns related to oversight and loan quality within the microfinance portfolio.
Context:
IndusInd Bank, headquartered in Mumbai, is a major private sector financial institution in India offering a range of services across retail, corporate, and microfinance segments. The recent developments underscore increasing regulatory and investor focus on transparency, internal governance, and accounting practices within India's banking sector.
The Reserve Bank of India has, in recent years, called for enhanced auditing and risk management standards across financial institutions, especially in high-risk segments like microfinance. The sector, while crucial for expanding credit access in rural and semi-urban regions, has faced challenges related to loan recovery, customer verification, and regulatory compliance.
IndusInd Bank’s audit findings are likely to prompt closer regulatory scrutiny not only of the bank’s internal processes but also of broader sectoral practices around financial reporting and whistleblower protections.
Conclusion:
As IndusInd Bank works to restore confidence among investors and regulators, the fallout from its internal audit is expected to shape reforms in its accounting protocols and operational strategy—especially in its high-exposure microfinance division. The bank has not yet issued a timeline for concluding its internal investigations or implementing corrective actions.
India Revokes Celebi Aviation Security Clearance Amid Turkey-Pakistan Ties
India cancels security clearance of Turkish firm Celebi Aviation over national security concerns following Turkey’s support for Pakistan in Operation Sindoor.
|2025-05-16
India-US Trade Deal: Trump Claims ‘Zero Tariffs’ as Jaishankar Urges Caution
US President Donald Trump claims India offered zero tariffs on American goods. India responds, calling the remarks premature amid ongoing trade negotiations.
|2025-05-16
Adani Airport Ends Lounge Access Partnership With DragonPass One Week After Launch
Adani Airport Holdings has ended its partnership with China-based lounge provider DragonPass, halting access for DragonPass users at Adani-managed Indian airports.
|2025-05-16
Microsoft Layoffs Spark Online Debate Over Job Security in Tech and Government Sectors
Microsoft layoffs reignite debate on private vs government job security, with Indian social media users weighing career stability against high tech salaries.
|2025-05-15
India Urges IAEA Oversight of Pakistan's Nuclear Weapons Amid Tensions
India's Defence Minister Rajnath Singh has called on the IAEA to monitor Pakistan's nuclear weapons, citing concerns over safety and responsible handling.
|2025-05-15