Rs.173 Crore Fraud Discovered in IndusInd Bank, Read What Bank said

IndusInd Bank has discovered a serious case of financial misreporting involving ₹173 crore in its microfinance portfolio. This was revealed after the bank carried out internal audits and hired an independent professional firm to investigate further. The bank suspects that a few employees, who were involved in important accounting and financial reporting tasks, may have played a role in this fraud.

In a stock exchange filing, IndusInd Bank said that ₹173 crore was wrongly recorded as part of the microfinance income. The bank has since corrected this error and is taking necessary actions.

More Issues Found in Internal Audits

Additional internal audits conducted last week found two more major errors:

• One discrepancy worth ₹674 crore was found in interest income related to the microfinance segment.
• Another ₹595 crore discrepancy was found in other assets and liabilities.

Also, it was reported that during the last three quarters ending December 2024, about ₹172.6 crore was wrongly booked as “fee income” in the microfinance section. This amount was later corrected in the financials for the March 2025 quarter.

These errors are expected to have a major impact on the bank’s financials. So far, the estimated hit on the FY25 balance sheet, especially from its derivatives portfolio, is around ₹1,960 crore. However, the bank has included these adjustments in its financial results for the year ending March 31, 2025.

Bank Taking Legal Steps

The Board of IndusInd Bank has directed the management to take all legal measures necessary. This includes informing regulatory authorities like the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). The bank also plans to hold accountable any employees found responsible.

Recent media reports also claim that SEBI is looking into possible insider trading involving at least six employees. It is suspected that some of them may have had prior knowledge of the financial irregularities before they were made public.

Earlier this year, two top executives stepped down in relation to the issue. Managing Director and CEO Sumant Kathpalia resigned, taking moral responsibility for the misreporting. His resignation followed the exit of Deputy CEO Arun Khurana just a day earlier. Kathpalia had only received a one-year extension from the RBI, despite the board recommending a three-year term.