IndusInd Bank Ltd., one of India’s leading private lenders, is facing scrutiny after uncovering a ₹173 crore accounting fraud in its microfinance portfolio. The bank suspects staff involvement in the irregularities, which were identified through an internal audit and an external investigation.
Key Findings & Financial Impact
- The fraud involved incorrectly recorded fee income over three quarters, ending December 2024, which was reversed in Q4 FY25.
- The bank’s derivatives portfolio discrepancies are estimated to impact its net worth by 2.35% as of December 2024.
- External agency PwC has been engaged to assess the financial impact and recommend corrective measures.
Market Reaction & Stock Performance
Following the disclosure, IndusInd Bank’s stock witnessed volatility, with analysts expressing concerns over corporate governance and deposit outflows. Some brokerages have cut FY26 earnings estimates by up to 45%, citing potential liquidity challenges.
Regulatory & Legal Actions
The bank’s Board of Directors has directed necessary steps under applicable laws, including reporting to regulatory authorities and investigative agencies. The lender is also fixing staff accountability to prevent future discrepancies.
Leadership Changes & Future Outlook
The crisis has led to top-level resignations, including MD & CEO Sumant Kathpalia, who stepped down citing moral responsibility. The bank is in the final stages of appointing a new CEO, expected to be announced before June 30, 2025.
With corporate governance concerns and financial stability at stake, investors are closely monitoring IndusInd Bank’s next steps.
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