Bharat Financial Inclusion's Executive Vice Chairman J Sridharan has stepped down from his position, NDTV Profit reported on Monday. This is a microfinance arm of IndusInd Bank, which posted the weakest earnings among Indian banks in the March quarter.
People familiar with the matter also informed NDTV Profit that two other officials handling loan data have also been asked to leave. Last month, IndusInd Bank's CEO and Managing Director, Sumant Kathpalia, resigned from his position. A day earlier, his Deputy, Arun Khurana, resigned. In January, its Chief Financial Officer Gobind Jain had also resigned, just days before reporting the December quarter results.
The private lender has been under pressure following a series of troubling developments, including alleged misreporting of derivatives, accounting irregularities, and the recent exit of two senior executives. IndusInd Bank's mis-accounting saga, which started with "discrepancies" in its derivative portfolio, has now turned into a suspected "fraud" in which the private lender said there might be involvement of some key senior officials.
As a result of this prolonged series of lapses — some of which trace back to FY16 — the company has reported a staggering net loss of Rs 2,328.92 crore for the fourth quarter of FY25.
During the post-earnings analyst call, Sunil Mehta, Non-Executive Chairman of the bank's board, acknowledged serious lapses in financial reporting. He revealed that the bank had incorrectly recognised interest and fee income during the first three quarters of FY25—entries that were subsequently reversed in January. Additionally, an internal review uncovered that several microfinance accounts had been wrongly classified as standard assets. These accounts have since been moved to the non-performing asset (NPA) category.
The bank stated that it has made provisions covering 95% of these loans, leading to a significant adverse impact of Rs 1,969.2 crore on its earnings.
In its review of the microfinance portfolio for the period ended December 31, 2024, the Internal Audit Department (IAD) identified discrepancies in the recording of cumulative interest income amounting to Rs 172.58 crore. The bank subsequently reversed this incorrect income recognition. After adjustment for an interim provision of Rs 322.43 crore led to an adverse impact of Rs 422.36 crore in the quarter ended in March.
