IndusInd Bank Under SFIO Scanner As MCA Orders Probe Citing Public Interest

The Ministry of Corporate Affairs (MCA) has ordered a probe by the Serious Fraud Investigation Office (SFIO) into the affairs of IndusInd Bank Ltd, citing public interest and serious accounting irregularities

flagged by statutory auditors and forensic reviews, The Economic Times reported.

The move comes even as the Mumbai Police’s Economic Offences Wing (EOW) is preparing to close its preliminary enquiry after finding no evidence of fund siphoning or diversion, sources told The Economic Times.

MCA order and accounting discrepancies

As per the report, the central government’s order refers to multiple ADT-4 forms filed under Section 143(12) of the Companies Act, 2013 by the bank’s statutory auditors. One such ADT-4, dated May 12, 2025, flagged accounting discrepancies aggregating around Rs 1,959.78 crore for the period spanning FY2015-16 to FY2023-24.

The MCA noted that these filings pointed to accounting errors requiring corrective action, as well as weaknesses in internal control systems. The decision also took into account forensic monitoring reports (FMRs) submitted by the bank to the Reserve Bank of India and the Serious Fraud Investigation Office.

“Based on the ADT-4 filings and the FMRs submitted to the RBI and SFIO, the central government has formed the view that an investigation into the affairs of the company is necessary in the public interest,” a source told The Economic Times.

Scope of the SFIO investigation

The SFIO probe will examine observations recorded in ADT-4 forms, forensic monitoring reports, forensic audit reports, internal and inspection audit reports, and findings of other agencies under the Companies Act, the report said.

The investigation will also scrutinise alleged manipulation of books of account, creation of fictitious accounts, misclassification or conversion of property, and the consequent impact on the bank’s financial statements. Transactions involving assets and liabilities, related-party transactions, loans and advances, and investments will be reviewed, with the SFIO mandated to identify any diversion or routing of funds and the ultimate beneficiaries, if any.

Mumbai EOW finds no criminality

In parallel, it has also been reported that the Mumbai EOW has found no evidence of fund siphoning or diversion in its preliminary enquiry, which has been ongoing since August, and therefore does not see grounds for registering an FIR.

Before formally closing the enquiry, the EOW has sought clarifications from the RBI regarding prior regulatory knowledge of the issues, as well as accounting and hedging practices. The RBI did not respond to queries, according to the report.

In March, the Hinduja Group–promoted lender disclosed a Rs 1,979-crore lapse in its derivatives portfolio. This included misstatements of Rs 674 crore booked as microfinance income, Rs 595 crore shown as unsubstantiated balances under other assets, and Rs 172.6 crore misclassified as fee income.

The bank had stated that these issues could have a 2.35% impact on its net worth as of December 2024, but maintained that its capital position and profitability were adequate to absorb the one-time impact.

Following RBI directions, PwC reviewed derivative transactions between April 2023 and June 2024, while Grant Thornton conducted a forensic audit covering FY2016 to FY2024. The latter report is understood to have identified around 25 individuals linked to the lapses.

The EOW enquiry was initiated after the bank itself flagged the lapses. Former chief executive officer Sumant Kathpalia, former chief financial officer Govind Jain, former deputy chief executive Arun Khurana, and several suspended finance staff members were questioned as part of the probe.