IndusInd Bank Faces Heat as Ex-CFO Reveals Decade-Long Derivatives Accounting Lapses

Accounting irregularities in IndusInd Bank have continued for 10 years. This came to light through the bank's ex-Chief Financial Officer (CFO) and whistleblower, Govind Jain. Jain alleged in front of the Mumbai Police's Economic Offences Wing (EOW) that accounting irregularities in the bank's derivatives portfolio have been continuing since 2015. Jain and Deputy CEO Arun Khurana were recorded by police this week.

Jain stated that the then board, senior management, and former finance head SV Jaregaonkar were aware of the accounting irregularities. Because of this, Jain resigned four times. He first submitted his resignation in June 2024, but it was not accepted. He then resigned three more times, and finally, in January of this year, his resignation was accepted. He repeatedly appealed to the then MD and CEO, Sumant Kathpalia, to appoint an independent auditor and investigate the matter. Failure to do so could result in serious losses for the bank. On September 24, the Economic Offences Wing (EOW) of the Mumbai Police recorded the statement of the bank's former CEO, Sumant Kathpalia, in connection with the investigation into the accounting lapses.

Uncertainty surrounding IndusInd Bank began in March this year when the bank reported accounting errors related to its derivatives portfolio. On March 10, the bank disclosed that it could suffer a loss of ₹1,577 crore due to irregularities in derivatives transactions. After several audits, the bank reported a one-time loss of approximately ₹2,000 crore in its March quarter results. On May 27, SEBI issued an interim order, stating that bank management was aware of accounting irregularities in its derivatives portfolio 15 months before the bank disclosed them to the stock exchanges.