IndusInd Bank's Treasury Lapses Led to ₹1,817-Cr Profit Overstatement, PwC Review Finds

A confidential PwC review commissioned by IndusInd Bank has found profit and asset overstatement of ₹1,817.58 crore at the bank, stemming from manual accounting entries in its treasury operations that created a receivable pool of over ₹2,200 crore, the Economic Times reported after reviewing a copy of the 71-page report.

PricewaterhouseCoopers (PwC) was brought in by the bank in October 2024 to review the accounting treatment of derivative trades executed by its treasury desk. The report, submitted in April 2025, examined transactions between April 1, 2023 and June 30, 2024.

What the Report Found

The review identified a structural disconnect between the bank's Asset Liability Management (ALM) Desk, which manages balance-sheet risks, and the Trading Desk, which executes market transactions. PwC found that the treasury back office posted manual entries to offset losses incurred by the trading desk.

As of March 31, 2024, these manual adjustments in the trading book, created as a corresponding receivable from the ALM Desk, amounted to ₹2,201.76 crore, the report said. After accounting for ₹384.18 crore of swap-cost amortisation recorded by the ALM Desk, the net overstatement of profit and assets stood at ₹1,817.58 crore.

The report noted that the bank could not clearly establish whether its on-balance sheet assets and liabilities were hedged externally. "In the absence of a direct linkage of an external deal to the internal deal, it is not possible to designate the exposure taken on from the ALM desk as being hedged externally," it said.

Other Accounting Lapses

Beyond the manual entries, PwC flagged lapses in foreign exchange forward accounting, cross-currency swap accounting and swap-cost amortisation.

Forward contracts entered into by the ALM Desk with external counterparties were not marked to market at reporting dates and were instead recognised only upon settlement. This meant unrealised losses of ₹121.46 crore as of March 2024 and ₹161.43 crore as of June 2024 went unrecognised in the relevant periods. Errors in cross-currency swap accounting and swap-cost amortisation led to further misstatements of ₹31.88 crore and ₹15.93 crore, respectively.

The review covered over one million trades across seven product categories, including 331,387 internal transactions and examined the interface between treasury platform Calypso and core banking system Finacle.

PwC flagged a lack of strong controls over manual entries and out-of-system adjustments, warning that lapses in maker-checker review and overall oversight could result in inaccurate entries and leave the system vulnerable to errors or fraud.

Whistleblower Complaint

This comes after a fresh whistleblower complaint was filed against IndusInd Bank, alleging insider trading, governance failures and shortcomings in audit and forensic reviews, according to a previous report by ET.

The complaint has been submitted to the Prime Minister's Office, the Reserve Bank of India (RBI), the Serious Fraud Investigation Office (SFIO) and the National Financial Reporting Authority (NFRA), among other regulatory agencies. It was also sent to the bank at the end of May.

The development follows the discovery of around ₹2,000-crore derivatives accounting discrepancy at the private lender in 2024.

The complaint, a copy of which was reviewed by ET, names Samir Agarwal, former zonal head of eastern India at IndusInd Bank.

It alleges that Agarwal used confidential information obtained through his corporate banking responsibilities to facilitate share transactions by family members and related entities, generating gains of approximately ₹46 crore on trades worth nearly ₹815 crore, ahead of key public developments.

The complaint further alleges that family-linked trades totalled around ₹816 crore with gains exceeding ₹53 crore, a significant portion of which involved companies within his corporate loan portfolio.

In one cited instance, Agarwal's wife allegedly purchased over 3.4 million shares of Kesoram Industries, a company within his loan portfolio, prior to a major strategic transaction, resulting in gains of approximately ₹3.26 crore.

Beyond insider trading, the complaint also alleges manipulation of financial records, evergreening of microfinance loans, suppression of audit findings and attempts by senior management and board members to conceal irregularities.

IndusInd Bank, in its response to ET's queries, said it "rejects the assertions" made by the whistleblower. The bank stated that all concerns had been "duly examined" and "appropriate actions" taken in accordance with internal policies and regulatory requirements.

It added that it had proactively reported certain matters to the relevant authorities and would not comment further given that the matter is under review.