One of India’s leading private sector banks, IndusInd Bank, has found itself in hot water with the Financial Reporting Review Board (FRRB) of the The Institute of Chartered Accountants of India (ICAI) after a discrepancy of ₹2,100 crore was found in its derivatives portfolio. The discrepant figure, which could have a direct impact on about 2.35% of the bank’s net worth has also attracted heightened oversight from the Reserve Bank of India (RBI).
Established in 1994, IndusInd Bank has grown into India’s fifth-largest private sector lender, providing services across retail, corporate, and wealth management segments.
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The bank first noted the derivative-related discrepancy around September-October 2024 and gave an initial update to the RBI last week. With analysts pegging the accounting lapse at ₹2,100 crore, the ICAI-FRRB is expected to examine whether the bank’s financial statements comply with Indian Accounting Standards, Schedule III of the Companies Act, and RBI guidelines.
ICAI President Charanjot Singh Nanda has confirmed that the professional body may proactively review the financials, reinforcing ICAI’s commitment to ensuring accounting transparency in India’s banking sector.
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While CEO Sumant Kathpalia’s term was extended for one year, his comments on the concerns raised by the RBI over his management style has fueled speculation about a potential leadership transition in 2025 with RBI advising IndusInd Bank’s board to seek candidates for its next CEO and COO, none of whom may be employed with the bank at present.
As uncertainty looms over IndusInd Bank’s stock market performance and governance, depositors have raised concerns about the safety of their funds. However, a report by NDTV Profit reassures that depositors have no reason to panic.
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As of December 31, 2024, the bank held ₹4.09 lakh crore in outstanding deposits against ₹3.66 lakh crore in loans, maintaining a capital adequacy ratio of 16.46%—well above the regulatory minimum of 11.5%.
History shows that India’s Banking Regulator jumps to action and intervenes to safeguard depositors in times of crises, averting a failure scenario. As ICAI-FRRB and RBI deepen their review, the focus now shifts to next steps to be taken by IndusInd Bank in addressing governance concerns and restoring market confidence.
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