NFRA Demands Audit Files from IndusInd Bank Over Derivatives Discrepancies

India's accounting and auditing standards regulator, the National Financial Reporting Authority (NFRA), has reportedly issued notices to current and former auditors of IndusInd Bank. It is demanding detailed information regarding the bank’s audit processes, driven by concerns over accounting discrepancies within the bank's derivatives portfolio. 

At 11:38 AM, IndusInd Bank share price was up 0.34% and was trading at ₹819.60. 

NFRA Steps in IndusInd Bank Case 

According to sources, NFRA has requested all audit files from the statutory auditors who signed IndusInd Bank's accounts since 2017. This extensive request is due to "accounting irregularities in the IndusInd derivatives book over a period of time." The regulator aims to thoroughly analyse audit reports and supporting evidence to verify the bank’s financial claims and the auditors' work. 

Early Warnings and Delayed Disclosure 

Adding to the scrutiny, the Securities and Exchange Board of India (SEBI) recently revealed that IndusInd Bank's management was aware of these derivatives discrepancies as early as December 2023, a significant 15 months before their public disclosure.  

SEBI's report states that the bank first noticed the incorrect accounting treatment on September 26, 2023, after forming an internal team as per the Reserve Bank of India's (RBI) directions. The bank finally disclosed the figures on March 10, 2025. 

RBI's Take on IndusInd Bank Crisis  

Meanwhile, RBI Governor Sanjay Malhotra recently sought to calm market concerns. During a Monetary Policy Committee (MPC) press briefing on June 6, he stated that the issue would "settle down soon" and poses "no systemic risk" to the banking sector. He also noted the "moral responsibility" taken by the former MD and CEO, Sumant Kathpalia, who stepped down. Kathpalia's resignation followed several regulatory concerns, including issues in loan provisioning and asset classification, particularly in the bank’s microfinance and vehicle finance segments. 

Read more: Explained: Can You Pay Advance Tax on Monday, June 16, 2025? 

Conclusion 

IndusInd Bank had reported a ₹1,529 crore impact from these discrepancies in March 2025. However, a forensic investigation by Grant Thornton highlighted that executives knew about these problems much earlier, in December 2023, but delayed informing the public. This ongoing investigation underscores the heightened regulatory oversight of financial institutions to ensure transparency and accountability. 

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