IndusInd Bank Acknowledges Significant Accounting Error in Microfinance Portfolio

In a recent disclosure to the stock exchanges, IndusInd Bank admitted to incorrectly booking Rs 674 crore in interest income over three quarters in FY25. This revelation comes amidst ongoing investigations into the bank's accounting practices.

The bank has stated that it has reversed these amounts in Q4FY25 and is implementing internal corrective measures. This incident follows a whistleblower complaint that prompted the bank's internal audit department to reopen investigations into past accounting reversals.

Leadership Changes Amid Financial Discrepancies

Both CEO Sumant Kathpalia and deputy CEO Arun Khurana resigned in late April 2025, taking responsibility for a derivatives accounting lapse with a Rs 2,000-crore impact on the bank's financials.

The internal audit report, submitted on May 8, confirmed the incorrect recording of interest income and noted that the findings were triggered by a whistleblower complaint. The bank emphasized that these accounting issues are separate from those previously disclosed.

Ongoing Investigations and Regulatory Scrutiny

The whistleblower letter, sent to both the RBI and the bank’s board, highlighted a Rs 600-crore discrepancy in interest income from microfinance and raised concerns about a potential conflict of interest involving a senior executive.

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