IndusInd Bank Will Take Rs 1,979-Crore Hit Due To Derivative Gaps, Confirms External Probe

IndusInd Bank Ltd.'s discrepancies in accounts balances of its derivative portfolio will have a negative impact of Rs 1,979 crore as on June 2024, according to a report from an external agency tasked to probe the matter.

The bank received the report from the external agency on Tuesday, according to an exchange filing.

The impact amounts to 2.27% of the private sector bank’s net worth as of December 2024, as compared to an internal review that had estimated an adverse impact of approximately 2.35%.

"The bank will appropriately reflect the resultant impact in the financial statements for FY 2024-25 and continue to take suitable steps to augment the internal controls relating to the derivative accounting operations of the bank," the filing said.

On March 10, the lender had appointed an external agency in October to ratify its internal review of the derivatives portfolio. NDTV Profit had later reported that this external agency was PwC.

NDTV Profit had also reported that the bank likely delayed sharing information with PwC, leading to delays in completion of the audit.

On March 20, the board appointed another independent investigation into the accounting discrepancies, which is reportedly being conducted by Grant Thornton.

The investigation aims to determine the root cause of these discrepancies and assess the accuracy of the derivative contracts' accounting treatment against established standards. Additionally, the Grant Thornton investigation will also identify any lapses and establish accountability in the case.

The Reserve Bank of India is awaiting the results of this internal accountability exercise, specifically the board's adoption of the independent firm's report, before deciding on any regulatory action. The RBI will base its actions on the board's findings regarding the accounting lapses, NDTV Profit had reported.

The bank will take this one-time hit of Rs 1,979 crore in its March quarter results.

As per its quarterly provisional numbers, IndusInd Bank's advances fell by 5.2% sequentially to Rs 3.48 lakh crore in the January-March period.

On a year-on-year basis, net advances rose a little over 1%. Deposits of the bank were at Rs 4.11 lakh crore, up only by 0.4% a quarter ago and by 6.8% a year ago.