Big News for IndusInd Bank! Govt orders SFIO investigation Over Rs.2,000 Crore Accounting Irregularities
The Ministry of Corporate Affairs (MCA) has ordered a Serious Fraud Investigation Office (SFIO) probe into IndusInd Bank after auditors and forensic reports flagged serious accounting irregularities worth nearly ₹2,000 crore. The government said the action was taken in public interest.
This decision 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.
According to the MCA order, IndusInd Bank’s statutory auditors filed multiple ADT-4 reports under the Companies Act, which are submitted when auditors suspect fraud. One key filing dated May 12, 2025, flagged accounting differences of ₹1,959.78 crore between FY16 and FY24. The reports pointed to accounting errors, weak internal controls and the need for corrections. Forensic monitoring reports submitted to RBI were also reviewed.
The SFIO has now been asked to examine audit filings, forensic audit reports, internal audits, RBI submissions and findings of other agencies. It will probe whether there was manipulation of accounts, misclassification of assets, irregular loans, related-party transactions, investments or any diversion of funds, and identify beneficiaries, if any.
At the same time, the Mumbai EOW, which began its enquiry in August, said it does not see grounds to register an FIR so far. The agency recorded statements of around 12 current and former employees. It also sought clarification from the RBI on whether regulators were earlier aware of the issues and whether the bank’s foreign currency hedging practices were within rules.
In March 2025, the Hinduja Group-promoted bank disclosed a ₹1,979-crore lapse in its derivatives portfolio. It also admitted to misstatements, including ₹674 crore wrongly booked as microfinance income, ₹595 crore shown as unexplained assets, and ₹172.6 crore incorrectly classified as fee income. The bank said the total impact could reduce its net worth by about 2.35%, but added that it has enough capital to absorb the losses.
Following RBI directions, PwC reviewed derivative transactions between April 2023 and June 2024, while Grant Thornton conducted a forensic audit covering FY16 to FY24. The Grant Thornton report is said to have named around 25 individuals linked to the lapses.
The EOW probe began after IndusInd Bank itself reported the irregularities. Former CEO Sumant Kathpalia, ex-Deputy CEO Arun Khurana, former CFO Govind Jain, and several suspended finance staff have already been questioned.
Investigators are also examining another accounting entry of about ₹250 crore. Some employees told investigators that foreign currency hedging is a routine banking practice, prompting the EOW to seek RBI’s view on whether such practices were allowed.
The bank’s current management has accused the former leadership of causing wrongful loss. Authorities are also examining whether the accounting adjustments inflated the bank’s share price and whether any senior executives benefited through insider trading.
The accounting issues, first noticed in derivatives and later in microfinance, led to the resignations of CEO Sumant Kathpalia and Deputy CEO Arun Khurana in April 2025. Officials said the former top executives may be summoned again if needed.
