IndusInd Bank Probes Fresh Accounting Irregularities After Whistleblower Letter

IndusInd Bank is now looking into a fresh set of accounting concerns after receiving a whistleblower letter that was also sent to the Reserve Bank of India (RBI) and the bank’s board. These issues are separate from the ones already disclosed and involve entries under “other assets” and “other liabilities” within operating expenses. It is still unclear which financial years these entries belong to.

Whistleblower’s Allegations on IndusInd Bank

The whistleblower, a senior finance employee at the bank, sent the letter just before RBI granted a one-year extension to CEO Sumant Kathpalia in March. The letter highlighted multiple issues, including a ₹600-crore discrepancy in interest income from the bank’s microfinance portfolio and a questionable relationship between a senior executive and an employee who was terminated and later rehired. 

Audit and Investigations Begin into IndusInd Bank

 Following the letter, the bank started investigating the ₹600-crore discrepancy. On April 22, IndusInd confirmed it had hired an audit firm to assist with the probe. It has now been revealed that the whistleblower letter also triggered deeper scrutiny into foreign exchange derivative deals. These issues led to the resignations of CEO Sumant Kathpalia and Deputy CEO Arun Khurana, and the bank will make a ₹1,960-crore provision for the fourth quarter of FY25.

The bank’s internal audit team, along with audit firm EY, is reviewing the microfinance portfolio and reversed accounting entries. EY has also been asked to check for signs of bad loans and possible collusion between the bank’s top management and its microfinance unit. 

Forensic Report and Fallout

Grant Thornton, the main forensic auditor, submitted its report on April 26. The next day, IndusInd Bank announced the ₹1,960-crore adverse impact on its earnings. The twin resignations of the CEO and deputy CEO followed soon after. 
 

At 12:07 PM, IndusInd Bank's share price was down 1.14% and was trading at ₹772.45.

Conclusion 

The situation at IndusInd Bank shows the serious effects of internal financial mismanagement and the importance of whistleblowers. The bank is now under pressure to restore confidence among investors and regulators as it continues with a detailed internal review.
 

Read more on: Gensol Share Price Hit 5% Upper Circuit for 2nd Straight Day After Exit of Jaggi Brothers. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.