IndusInd Bank Faces First Quarterly Loss in 19 Years Amid Internal Fraud and Accounting Issues

MUMBAI: IndusInd Bank has reported a quarterly loss of Rs 2,236 crore for the three months ending March 2025, marking its first quarterly loss since March 2006. This follows a significant reversal from a net profit of Rs 2,346 crore in the same period the previous year. The bank’s financial results highlight a series of accounting discrepancies and fraud allegations that have raised concerns about its financial integrity.

The bank’s recent disclosures came after the abrupt resignations of its chief executive and deputy last month, following the discovery of widespread irregularities in its foreign exchange derivatives and microfinance portfolios. Despite these challenges, IndusInd Bank managed to record a profit of Rs 2,642 crore for FY25, which is 70% lower than the Rs 8,950 crore recorded in FY24.

In filings to the stock exchange, the bank stated that internal and external reviews uncovered a new fraud where Rs 172.6 crore was wrongly booked as fee income in its microfinance arm. Broader discrepancies spanned derivative trades, income recognition, and the classification of assets and liabilities. The board has raised concerns about potential fraud involving senior employees and has indicated it will file complaints with enforcement agencies.

Sunil Mehta, the bank’s chairman, informed analysts that the accounting of internal derivatives was discontinued from April 2024 after confirmation of irregularities by external reviewers. Additional audits revealed that income was misclassified, loans were wrongly categorized, leading to an under-provisioning of Rs 1,885 crore. The bank also misbooked Rs 760 crore of interest income that should have been recorded elsewhere.

Mehta said that the board will