IndusInd Bank’s Troubles Mount After ₹674 Cr Misbooked as Interest Income Comes to Light

IndusInd Bank has found that a cumulative amount of Rs 674 crore was wrongly recorded as interest income in the first three quarters of the financial year 2025 and the said amount was completely reversed as of January 10 this year. In an exchange filing on May 15, IndusInd said the incorrectly recorded information was discovered while conducting a review of the bank’s microfinance business by its internal audit department (IAD). This comes at a time when the bank and its top executives are under heightened regulatory scrutiny for accounting lapses. 

“The IAD has also examined the roles and actions of key employees in this context. The board is taking necessary steps to strengthen internal controls, fix accountability of the persons responsible for these lapses, and will act as appropriate,” said the bank in an exchange filing. 

IndusInd Bank’s IAD initiated the inspection following a whistleblower complaint. The audit committee of the IndusInd Board had asked the IAD to review transactions recorded under the “other assets” and “other liabilities” sides. 

IAD submitted its review report on May 8 and discovered an unsubstantiated balance totaling Rs 595 crore in “other assets” accounts. The amount was subsequently set off against corresponding balances under “other liabilities” in January 2025. 

Earlier in April this year, the bank had announced that it is conducting an internal audit of its microfinance business. IndusInd Bank had engaged accounting and consulting giant EY to help in assessing relevant records.

Also Read: IndusInd Bank Likely to Slap Penalties on Former CEO & Deputy for Insider Trading

More Trouble for IndusInd Bank 

The discovery has added trouble to the private sector lender, which is already facing regulatory scrutiny from various government watchdogs, including the securities and exchange board of India (Sebi) for accounting lapses in its derivatives portfolio. The sudden resignation of its MD and CEO, Sumant Kathpalia, and deputy CEO, Arun Khurana, over their alleged involvement in insider trading has already left the bank without proper leadership. Kathpalia, in a letter addressed to the bank’s board, said he stepped down to take moral responsibility for acts of commission and omission that took place under his leadership.