SFIO has intensified its probe into IndusInd Bank, summoning former CEO and CFO over the ₹1,979 crore accounting lapse.
The irregularities stem from mis-accounting in derivatives and other entries flagged by auditors and forensic reviews.
While no fund diversion has been found so far, the investigation is focusing on accountability, governance lapses, and possible misreporting by top executives.
IndusInd Bank Fraud Probe: SFIO Tightens Screws on Ex-CEO, CFO Over ₹1,979-Cr Accounting Lapse
The SFIO is examining whether the accounting lapses constitute fraud under Section 447 of the Companies Act, which deals with corporate governance violations and financial misreporting
IndusInd Bank Fraud Probe: SFIO Tightens Screws on Ex-CEO, CFO Over ₹1,979-Cr Accounting Lapse
Summary
Advertisement
The Serious Fraud Investigation Office (SFIO) has summoned former key managerial personnel of IndusInd Bank, including ex-CEO Sumant Kathpalia, former Chief Financial Officer Gobind Jain and former Deputy CEO Arun Khurana, in connection with alleged accounting irregularities at the Hinduja Group-promoted private lender.
The federal agency is seeking explanations from the former executives regarding the alleged discrepancies, according to a report by Economic Times.
How the Probe Began
The SFIO initiated its investigation in late December 2025, acting on orders from the Ministry of Corporate Affairs (MCA), after auditors and forensic reports flagged significant accounting irregularities at the bank, citing public interest concerns.
The agency has been tasked with examining audit filings, forensic and internal audit reports, RBI submissions and findings of other agencies. Its mandate includes probing possible manipulation of accounts, misclassification of assets, related-party transactions, loans, investments and any diversion of funds, along with identifying beneficiaries, if any.
Advertisement
The SFIO is examining whether the accounting lapses constitute fraud under Section 447 of the Companies Act, which deals with corporate governance violations and financial misreporting.
What is The Irregularities Case About
The accounting lapses first came to light in March 2025, when IndusInd Bank disclosed a ₹1,979-crore discrepancy in its derivatives portfolio. Further misstatements included ₹674 crore incorrectly booked as microfinance income, ₹595 crore shown as unexplained assets and ₹172.6 crore wrongly classified as fee income.
The bank acknowledged that the total impact could reduce its net worth by approximately 2.35% as of December 2024, but maintained it had sufficient capital to absorb the hit.
Following RBI directions, PwC reviewed derivative transactions covering the period from April 2023 to June 2024, while Grant Thornton conducted a broader forensic audit spanning FY16 to FY24. The Grant Thornton report is understood to have named around 25 individuals linked to the lapses. Investigators were also separately examining an additional accounting entry of approximately ₹250 crore.
Advertisement
The accounting irregularities, first detected in derivatives and later in microfinance, led to the resignations of CEO Sumant Kathpalia and Deputy CEO Arun Khurana in April 2025. The bank's current management has accused the former leadership of causing wrongful loss to the institution.
EOW Finds No Siphoning
In a parallel development, Mumbai Police's Economic Offences Wing (EOW), which had been conducting a preliminary enquiry into the matter, has been preparing to close its inquiry after finding no evidence of fund siphoning or diversion.
Some employees who recorded their statements before the EOW told investigators that foreign currency hedging was routine banking practice. This prompted the EOW to seek the RBI's view on whether such practices were permissible, according to a previous report by India Today.