rewrite this title and make it good for SEOExternal audit uncovers Rs 1,979 cr discrepancy in IndusInd Bank derivatives portfolio

IndusInd Bank on Tuesday disclosed that an external audit has identified a Rs 1,979 crore negative impact to its net worth stemming from discrepancies in its derivatives portfolio. The bank stated that this represents an adverse impact of 2.27% on its net worth as of 2024.

In a regulatory filing, the lender confirmed that the financial implications of this derivatives issue will be reflected in its FY25 financial statements. The development follows the bank’s earlier decision to appoint an independent audit firm to investigate irregularities related to its derivative transactions.

The derivative-related discrepancies had prompted internal scrutiny and triggered concerns among investors and analysts. With the audit now complete, IndusInd Bank has acknowledged the findings and is expected to incorporate the required adjustments in its upcoming financial reporting.

The lender had previously projected a 2.35% negative impact on net worth through internal audit, while an external agency report now suggests a slightly lower figure of 2.27%. Last month, the Bank acknowledged discrepancies in account balances related to its derivative portfolio. The internal audit had initially estimated a 2.35% adverse impact on the Bank’s net worth as of December 2024. Additionally, the Bank disclosed the ongoing external review to validate the internal findings.

“On 10th March 2025, the Bank had disclosed that it noted certain discrepancies in accounts balances of its derivative portfolio. The internal review by the Bank had estimated an adverse impact of approximately 2.35% of the Bank’s Net Worth as of December 2024. The Bank had also disclosed the ongoing review by an external agency which was independently reviewing the internal findings,” the bank said in today’s exchange filing.

In a previous statement, Sumant Kathpalia, the Managing Director & CEO of IndusInd Bank, mentioned that any losses incurred in the derivative portfolio will be covered by the Profit and Loss account in the fourth quarter of FY25. He clarified that there are no plans to utilize general reserves for this purpose.

In Tuesday’s early trade, IndusInd Bank’s shares surged 8% to Rs 741.10 on the BSE. The stock price of the private sector lender has seen a 20% increase from its low of Rs 618.05 last week on April 7. This follows a 52-week low of Rs 605.40 on March 3, 2025. On Tuesday, the stock ended at Rs 735.85, up by +6.84%.

As of December 31, 2024, the bank’s net worth stood at Rs 65,102 crore, exceeding the previous year’s figure of Rs 58,841 crore as of December 31, 2023. IndusInd Bank has assured that any impact resulting from external agency reviews will be accurately reflected in the financial statements for FY 2024-25. Additionally, the bank will work on enhancing internal controls related to derivative accounting operations.

Earlier this month, after the MPC meeting, Reserve Bank of India Governor Sanjay Malhotra referred to the IndusInd crisis as an “episode” rather than a failure for the entire banking system. Speaking to the media following the MPC announcement, Malhotra assured that the country’s banking system remains “safe and secure.” When questioned about potential systemic concerns related to accounting lapses, Malhotra dismissed them as mere “episodes” stating that such occurrences are inevitable.