IndusInd Bank reported a quarterly loss of Rs 2,236 crore for the three months ending March 2025, compared to a net profit of Rs 2,346 crore the previous year. It marked the bank's first quarterly loss since March 2006.
Key Highlights
- IndusInd Bank posts ₹2,329 crore loss in Q4 FY25 due to fraud and accounting lapses.
- CEO and Deputy CEO resign amid leadership crisis; RBI seeks replacements by June 30, 2025.
This disclosure comes after the bank's chief executive and deputy abruptly resigned last month after discovering widespread irregularities in its foreign exchange derivatives and microfinance portfolios. The bank managed to make a profit of Rs 2,642 crore in FY25, which was 70% lower than the previous year's Rs 8,950 crore.
In filings with the stock exchange, the bank stated that internal and external reviews revealed a new fraud in which Rs172.6 crore was incorrectly recorded as fee income in its microfinance arm. Derivative trades, income recognition, and asset and liability classification were among the more significant differences. The board now suspects fraud involving senior employees and plans to file complaints with law enforcement.
Sunil Mehta, the bank's chairman, told analysts that accounting for internal derivatives would be discontinued in April 2024 after external reviewers confirmed irregularities. Additional audits revealed that income was misclassified, loans were incorrectly classified, resulting in an under-provisioning of Rs 1,885 crore, and balances in "other assets" and "other liabilities" were unsubstantiated. The bank also misbooked Rs760 crore in interest income, which should have been recorded elsewhere.
Mehta stated that the board will "do whatever needs to be done and follow the due process of law without fear or favour to ensure accountability". He stated that all issues had been identified, addressed, and declared to stakeholders, and that the new CEO would begin with a clean slate.
The statutory audit for FY25, conducted by MSK & Associates and Chokshi & Chokshi, reveals a damning list of past errors. Among the more serious findings was a write-off of Rs 1,960 crore in "accumulated notional profits" from internal trades since FY2016, which the auditors referred to as a "prior period item." They also highlighted the reversal of cumulative interest and fee income of Rs 846.4 crore recorded during the year.
Auditors highlighted manual entries from previous years that were netted off in the current year, totaling Rs 595 crore. More seriously, they highlighted glaring errors by former key management personnel.
