Q4 Loss at ₹2.3k Crore: IndusInd Trips on Lapses, Ends in Red

Time of India

22-05-2025

IndusInd Bank said it is probing key management personnel (KMP) for 'wrongful accounting practices' that could amount to fraud, as the Hinduja-promoted lender reported a net loss of ₹2,328 crore in the fourth quarter of FY25, against net profit of ₹2,349 crore a year ago.
For FY25, the bank reported a 71% fall in net profit to ₹2,575 crore, as it absorbed the entire financial impact of derivatives-related accounting lapses and underreporting of microfinance bad loans, seeking to start FY26 with a clean slate.
In regulatory filings on Wednesday, the bank said investigations into its accounts showed that the top management that exited the company under suspicious circumstances may have committed accounting fraud, misled the board of directors, and hid the truth from auditors to present a rosy picture.
The bank said board-commissioned probes 'revealed an involvement of senior bank officials, including former KMPs, in overriding key internal controls.'
They also showed 'a concealment from the board and the statutory auditors of the wrongful accounting practices adopted, over such period of time, as indicated in the… investigation/ review reports.'
IndusInd said 'there is likely involvement of senior management in the matters' and that it had 'reason to believe that suspected offences involving fraud may have been committed.'
The observations were part of the auditors' report filed along with the earnings of the bank. The auditors of the bank are MSKA & Associates and Chokshi & Chokshi LLP.
The auditors have referred the suspected fraudulent actions of the past management to the government, which may lead to criminal prosecution.
Chairman Sunil Mehta said IndusInd Bank's balance sheet remains healthy after absorbing all the negative charges, with a capital adequacy ratio of 16.24%, a provision coverage ratio of 70%, and a liquidity coverage ratio at 139% in the first half of this quarter.
'The financial impact of all the above has been fully taken in the audited financial statements for FY25. The approach toward financials has been to start FY26 on a clean slate, without carrying forward any issues,' Mehta told analysts soon after announcing the results.
'The bank has thoroughly reviewed all the lines of accounting and has taken a conservative view in some of the accounting treatments. This has reflected in a few one-offs versus the business-as-usual run rate,' he added.
The chairman also said the bank will not wait for the new chief executive to join and act on the lapses, while acknowledging that these were not expected from a bank like IndusInd.
He said the matter of likely fraud has been reported to the relevant government agency.
'The board has also taken a very serious view with respect to staff accountability across levels to reinforce the governance and compliance culture, and is in the process of taking action for staff accountability,' said Mehta.
Erstwhile managing director and chief executive Sumant Kathpalia and deputy CEO Arun Khurana, who were designated as KMP for the period under review, resigned late last month. Mehta said IndusInd is in the process of identifying a new chief executive within the June 30 deadline stipulated by the Reserve Bank of India (RBI).
The board had commissioned investigations regarding forex derivatives transactions of Rs 1,960 crore, incorrect interest income of Rs 673.8 crore and fee income of Rs 172.6 crore, apart from certain incorrect manual entries posted in the 'other assets' and 'other liabilities' of the previous year, amounting to Rs 595 crore.