IndusInd Bank has issued a clarification stating that the reported accounting discrepancy of ₹255 crore is not connected to any new investigation.
The bank said the irregularities were already identified in an earlier probe by an independent external agency, which submitted its report in April 2025.
In an exchange filing, the lender said, “We would like to clarify that the accounting irregularity of ₹255 crore as mentioned in the news report is not part of any new investigation being conducted by the Bank and that these findings were part of the investigation report submitted by the independent external agency to the Bank in April 2025.”
The bank added that it had disclosed all relevant details and incorporated the financial impact of the discrepancies in its audited statements for FY 2024–25, released on May 21, 2025.
According to reports citing people familiar with the matter, the Mumbai Police’s Economic Offences Wing (EOW) continues to examine alleged accounting lapses linked to entries worth about ₹255 crore.
Preliminary findings suggest that these entries date back to around 2016, shortly after IndusInd’s treasury derivatives desk was established. Investigators are scrutinising whether these were “unsubstantiated” internal entries lacking sufficient documentation or used to inflate reported income during weaker quarters.
So far, the EOW has not found any evidence of funds being siphoned off to personal or shell accounts. Officials said the discrepancies appear to be notional, rather than representing an actual diversion of money.
Around six to eight individuals have been questioned, including former Managing Director and CEO Sumant Kathpalia, ex-Chief Financial Officer Govind Jain and former Deputy CEO Arun Khurana.
Siddharth Banerjee, head of global markets and financial institutions at the bank, is also expected to be called for questioning. Police officials said the investigation is about halfway complete and that a clearer picture of any criminality should emerge by the end of October.
The controversy follows a wider probe launched earlier this year into accounting issues at IndusInd’s derivatives and treasury operations.
In March 2025, the bank disclosed financial misstatements and potential irregularities amounting to nearly ₹1,979 crore, related to derivatives transactions and other unsubstantiated balances. In response, IndusInd appointed an independent forensic auditor to review its books. The findings led the bank to revise certain financial statements and reclassify income and asset entries.
Following these revelations, Deputy CEO Arun Khurana resigned in April 2025, and the Reserve Bank of India reportedly pressed for leadership and governance reforms at the lender.
The external audit report submitted in April included the ₹255 crore entries now under discussion, which the bank says were already accounted for in its published results.
Separately, the Securities and Exchange Board of India (SEBI) is conducting an inquiry into possible insider trading by former IndusInd executives.
Regulators are investigating whether certain individuals traded in the bank’s shares ahead of public disclosure of the accounting lapses, potentially using unpublished price-sensitive information.
In May 2025, SEBI imposed interim trading restrictions on several former officials, including ex-CEO Sumant Kathpalia, pending the outcome of the investigation.
The renewed focus on the ₹255 crore irregularity has revived questions about the completeness of the bank’s earlier disclosures and the overall robustness of its internal controls.
While IndusInd maintains that the issue was thoroughly investigated and fully disclosed, law enforcement and regulatory agencies continue to examine whether the irregularities point to deeper governance lapses or systemic weaknesses in oversight.
The outcome of the EOW and SEBI investigations will likely determine whether IndusInd faces any further regulatory action or reputational fallout, as the lender seeks to reassure investors and rebuild confidence following months of scrutiny.
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