IndusInd Bank Posts Rs 2,236 Cr Loss, First in 20 Years Amid Fraud, Accounting Scandal

IndusInd Bank has reported a net loss of Rs 2,236 crore for the January–March 2025 quarter, marking its first quarterly loss in nearly two decades. The private sector lender had posted a profit of Rs 2,347 crore during the same period last year. This dramatic reversal is linked to serious internal discrepancies that have surfaced over recent months. 

Employee Fraud and Governance

The bank, in a statement issued on Wednesday, announced suspected fraud "against the bank" by certain of its employees. They are thought to have been deeply involved in misreporting finance and accounting record manipulation. The board has highlighted two major incidents currently being investigated.

Derivative Misreporting

The first significant slip is in the wrong accounting of the bank's internal derivative trades, for which the full fiscal year ended March 31 incurred a Rs 1,966 crore impact. The bank initially reported this in March. Also, an in-house audit of the bank's microfinance portfolio showed that Rs 684 crore was inappropriately accounted for as interest income over three quarters of FY25. The amount was reversed in January, the bank said.

Top-Level Resignations

The financial irregularities have ignited a leadership crisis. CEO Sumant Kathpalia and Deputy CEO Arun Khurana resigned last month amid increasing scrutiny on governance and internal controls. Chairman Sunil Mehta recognized the seriousness of the issue, saying, "The lapses have been unfortunate for an institution like our bank. However, the board and the management have shown strong resolve to address all the identified issues in a timely and comprehensive manner."

With regulatory attention set to increase, IndusInd Bank is increasingly under pressure to get back investors' confidence and strengthen its internal controls. The bank stated that its Q4 figures capture the complete extent of the differences realized to date through continuing probes.

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