PwC audit reveals big mistakes in working of IndusInd Bank that led to Rs.1979 crore Loss of Net worth

IndusInd Bank has revealed that an external audit by PwC (PricewaterhouseCoopers) found major errors in how the bank accounted for its derivative transactions over the past few years. These mistakes have led to a negative impact of ₹1,979 crore on the bank’s net worth.

According to the bank’s official filing with the stock exchange, the losses identified represent about 2.27% of the bank’s total net worth as of 2024.

What Are These Derivative Discrepancies?

The issue revolves around how the bank recorded profits and losses from foreign exchange (forex) derivative deals. Derivatives are financial contracts used by banks to manage risks related to foreign currency loans or deposits.

Here’s what went wrong:

• The bank’s treasury team used derivatives to hedge forex borrowings and deposits.
• While the profits from these transactions were properly recorded in the profit-and-loss (P&L) account, the losses were not correctly reflected in the bank’s Net Interest Income (NII).
• This led to a situation where the bank’s true financial position was not accurately shown, especially for trades that were done over the last 5 to 7 years, before April 2024.

Bank’s Internal Review and RBI’s Role

Back on March 10, 2025, IndusInd Bank had already disclosed that it had found some mismatches in the balances of its derivative portfolio. At that time, the bank’s internal team had estimated a slightly higher impact—around 2.35% of its net worth as of December 2024.

Later, an independent audit by PwC confirmed the discrepancies. The report also validated that the bank’s internal accounting for these derivative transactions was not fully aligned with regulatory guidelines.

Interestingly, sources in the banking sector believe that IndusInd Bank may have known about these issues earlier, but delayed the full disclosure. It’s believed that pressure from the Reserve Bank of India (RBI) prompted the bank to come forward.

Regulatory Changes and Compliance

As per new RBI rules issued in September 2023, all banks were banned from doing internal trades for hedging purposes, starting April 1, 2024. IndusInd Bank followed this directive and stopped such trades. However, the audit revealed that losses from old trades (done before April 2024) were not handled properly in the books.

In some cases, losses were allowed to accumulate instead of being adjusted daily, which is against standard accounting practices. This oversight may be viewed as a violation of proper accounting norms.

Next Steps by the Bank

IndusInd Bank has said it will:

• Adjust its financial statements for the year 2024-25 to reflect these losses.
• Strengthen its internal controls and risk management systems to avoid such issues in the future.
• Continue to work with external experts to ensure better compliance and transparency.