IndusInd Bank Ltd.'s microfinance subsidiary Bharat Financial Inclusion's Executive Vice Chairman J Sridharan has resigned, according to the people familiar with the matter. Sridharan has been associated with the company for over 16 years.
Two other officials handling loan data have also been asked to leave, people said. These exits have come as the bank found large accounting gaps in the microlending business.
During a post earnings analyst call, Non-Executive Chairman of the bank's board, Sunil Mehta, said that the bank was incorrectly booking interest income and fee income, over the first three quarters of the financial year ended March 31, 2025, which were reversed in January.
The bank also found that some microfinance accounts were wrongly being classified as standard. These have now been moved to NPA. The bank said that it has made 95% provisions against these loans and this resulted in an adverse impact of Rs 1,969.2 crore.
This is in addition to the whole derivative trades position fiasco, which the bank took between FY16 and FY24. According to the note to accounts, these were not in line with accounting guidelines.
The investigations and reviews found involvement of senior officials and former managerial persons in overriding key internal controls, Mehta had said.
The bank has also found concealment from board and statutory auditors and has reason to believe that suspected offences involving frauds may have been committed.
As a direct result of these various investigations and accounting issues, IndusInd Bank Managing Director and Chief Executive Officer Sumanth Kathpalia and Deputy CEO Arun Khuranna announced their immediate resignations in April.
The lender's Chief Financial Officer Gobind Jain had resigned in January, just days before reporting the December quarter results.
Last week, Mehta said that the board was in advanced stages of finding suitable CEO candidates. These names would be submitted to the Reserve Bank of India well before the deadline of June 30 and the regulator will finally decide who will take over.
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