IndusInd Bank, one of India's prominent private sector banks, has been thrust into a significant crisis following the revelation of a substantial ₹1,960 crore loss attributed to misaccounted internal derivative trades. The issue came to light after a forensic audit conducted by Grant Thornton uncovered discrepancies in the bank's accounting practices, particularly concerning internal hedging transactions that were not properly recorded. 

Key Findings from the Audit

The audit revealed that the bank's internal derivative trades, especially those terminated early, were incorrectly accounted for, leading to the recording of notional profits. This practice resulted in inflated earnings over several years, masking the actual financial health of the bank.

Leadership Resignations

In the wake of the scandal, Deputy CEO Arun Khurana resigned on April 28, 2025, acknowledging his oversight of the Treasury Front Office and the resultant lapses. Subsequently, CEO Sumant Kathpalia stepped down on April 29, 2025, taking moral responsibility for the failures in internal controls and governance. ​

Regulatory Response and Interim Management

The Reserve Bank of India (RBI) has approved the formation of an interim executive committee to oversee the bank's operations during this transitional period. The committee comprises senior executives, including Soumitra Sen and Anil Rao, ensuring continuity in the bank's functioning. ​

Impact on Financials and Market Confidence

The disclosed loss has significantly impacted IndusInd Bank's financial statements, with expectations of a net loss ranging between ₹300 crore to ₹600 crore for Q4 FY2024. The bank's stock has experienced volatility, reflecting investor concerns over governance and risk management practices.​

Conclusion

IndusInd Bank's derivatives accounting scandal underscores the critical importance of robust internal controls and transparent financial reporting. As the bank navigates this challenging period, the focus remains on restoring stakeholder confidence and implementing stringent compliance measures to prevent future lapses.

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