IndusInd Bank has appointed Grant Thornton to conduct a forensic review into the Rs 1,580 crore discrepancy detected in its derivatives portfolio earlier this month, two people aware of the matter told Reuters. Grant Thornton will also check if there is any evidence of fraud or internal misstatements.
IndusInd Bank is India’s fifth largest private lender with a balance sheet of $63 billion. Since it disclosed about the discrepancy on March 10, which it had said could hit its net worth by approximately 2.35 per cent as of December 2024, its shares have lost about 23.4 per cent.
Per the Reuters report, the first source said that Grant Thornton would assign accountability to individuals who were responsible for the lapses, and review the accounting treatment of all derivative contracts. The source added that Grant Thornton would also assess if there were any intentional misstatements internally related to the transactions.
Earlier last week, in another report, Reuters had said that the Reserve Bank of India (RBI) had urged the CEO of IndusInd Bank and his deputy to step down as soon as replacements were found. IndusInd Bank had, however, denied the claims, stating they were “factually incorrect”.
On Thursday, IndusInd Bank had informed the stock exchanges that it had appointed an unnamed firm to conduct a comprehensive investigation to identify the root cause of the discrepancies and identify lapses. In a regulatory filing, it had said, “…the Board of Directors at its meeting held today, decided to appoint an independent professional firm to conduct a comprehensive investigation to amongst others, identify the root cause of the discrepancies, assess the correctness and impact of the accounting treatment of the derivative contracts with regard to the prevailing accounting standards/ Guidance, identify any lapses and establish accountability in relation to the above.”
The accounting discrepancy came into light just days after the Bank had informed that the RBI has granted its approval for re-appointment of Sumant Kathpalia as MD & CEO of IndusInd Bank for a further period of one year with effect from March 24, 2025. This was despite the Bank’s board requesting a three-year reappointment. The private sector lender’s net worth as of December 31 stood at Rs 65,102 crore and the impact due to discrepancy is likely to be around Rs 1,530 crore which is more than Rs 1,401.3 crore net profit record in the third quarter of FY25.
Later, the RBI had said the private lender remains financially stable and well-capitalised. “There has been some speculation relating to IndusInd Bank in certain quarters, perhaps arising from recent events related to the bank. The Reserve Bank would like to state that the bank is well capitalised and the financial position of the bank remains satisfactory,” RBI had said in a statement.