IndusInd Bank clarifies ₹255 crore accounting issue not part of any new probe

IndusInd Bank clarified that the reported ₹255 crore accounting irregularity is not part of any new investigation and that the findings were already included in the independent external agency's report submitted in April 2025.

The bank said it has made all necessary disclosures regarding the issue and that the impact of these discrepancies has been fully reflected in its FY24-25 audited financial statements, released on May 21, 2025.

Meanwhile, the Mumbai Police Economic Offences Wing (EOW), which is investigating the broader IndusInd Bank case, has reportedly shifted focus to a newly surfaced ₹258 crore entry, raising fresh questions about the bank's financial reporting practices.

Sources told CNBC-TV18 on October 16 that "during the course of the Preliminary Enquiry (PE), an entry of ₹258 crore surfaced, prompting further scrutiny."

The EOW had launched its preliminary probe earlier this year into an ₹1,950 crore accounting mismatch in the bank's derivatives portfolio, initially attributed to an "accounting error" and reported to the RBI in March 2025. The revelation had triggered a sharp fall in the bank’s stock, wiping out nearly ₹15,000 crore in market capitalisation.

According to sources, the ₹258 crore figure was highlighted in an audit report by Grant Thornton (GT), which said that the amount was selectively used to boost net interest income in certain quarters when earnings lagged market expectations. The entry is described as cumulative, though the period it covers remains unspecified.

On the earlier ₹1,950 crore discrepancy, an EOW official told CNBC-TV18, "Based on our investigation so far, it appears the ₹1,950 crore was indeed an accounting error. We have not found any evidence of criminality linked to this amount."

Investigators believe the mismatch stemmed from differences in accounting methods used by the Asset-Liability Management (ALM) and treasury desks for hedging activities. Sources explained that "until 2019, the bank classified all forward contracts as ‘held to maturity’ per RBI norms. After the norms changed, contracts began to be closed early to capture better margins."

With those issues largely accounted for, the EOW is now concentrating on the ₹258 crore entry. The agency has summoned former top executives, Sumant Kathpalia (ex-MD & CEO), Arun Khurana (ex-ED & Deputy CEO), and Gobind Jain (CFO), and plans to question them again in connection with this matter.

Investigators reportedly view Jain as a potential whistleblower, with one source saying, "At this stage, there's nothing to suggest his complicity." However, in light of new findings, the EOW plans to re-summon all three executives.

Kathpalia, in his deposition, referred to the Grant Thornton audit report, which covered FY2015-2024. The report indicates that by 2023, senior management was aware of accounting discrepancies but only informed the board in March 2025.

So far, the EOW has ruled out siphoning and insider trading angles, and the bank’s original complaint did not allege fund diversion. The key question that remains is whether any criminal intent or wrongdoing can be linked to the ₹258 crore entry, a finding that will shape the next phase of the probe.

The EOW is now expected to summon executives from the bank's treasury department for further questioning.

With inputs from Santia Gora