IndusInd Bank Case: EOW probes newly surfaced ₹258 cr ‘unsubstantiated' entry

The Mumbai Police Economic Offences Wing (EOW), investigating the IndusInd Bank case, is now focusing on a newly surfaced entry of ₹258 crore, raising fresh questions over the bank’s financial reporting practices.

Sources told CNBC-TV18 that, “During the course of the investigation being conducted under the Preliminary Enquiry (PE), an entry of ₹258 crore surfaced, raising fresh questions.”

The EOW had initiated a preliminary enquiry into an accounting mismatch of ₹1,950 crore in the bank’s derivatives

portfolio — an issue earlier attributed to an “accounting error” and reported to the regulator in March 2025. The revelation had triggered a sharp fall in the bank’s stock, eroding nearly ₹15,000 crore in market capitalisation.

According to sources, “The ₹258 crore figure was mentioned in the audit report by GT. The report also notes that this amount was selectively used to shore up the bank’s net interest income in certain quarters when results were below market expectations.” The entry is said to be cumulative, though the report does not specify the period it pertains to.

Regarding the earlier ₹1,950 crore accounting error, EOW officials told CNBC-TV18, “Based on the investigation so far, it appears that the ₹1,950 crore figure was indeed an accounting error. We haven’t found any evidence of criminality linked to this amount so far.”

Also Read: IndusInd Bank reports 8% decline in net advances, deposits fall 5% in Q2

Investigators believe the mismatch arose from differing accounting methods used by the bank’s Asset-Liability Management (ALM) desk and its treasury desk for hedging. Sources explained that “until 2019, the bank treated all forward contracts as held to maturity, in line with RBI norms. But after the norms changed, the bank began terminating contracts early to capture better margins.”

Given these differing approaches, the EOW is now concentrating on the ₹258 crore entry. The agency had earlier 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 entry.

Investigators are inclined to believe Jain’s claim that he acted as a whistleblower in the case. “At this stage, there’s nothing to suggest his complicity,” a source said. However, in light of the new findings, the EOW intends to re-summon all three executives.

Kathpalia, in his statement, relied on the GT audit report, which covered 2015–2024. The report indicates that by 2023, senior management was aware of the accounting discrepancies but only informed the board in March 2025.

So far, the EOW has ruled out both siphoning and insider trading angles. The bank’s original complaint also did not allege any diversion of funds. What remains to be established is whether there was any criminality linked to the ₹258 crore entry—a question that will likely determine the next phase of the probe.

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