**IndusInd Bank Faces Major Investigation Over Accounting Irregularities**
The Serious Fraud Investigation Office (SFIO), operating under the Ministry of Corporate Affairs, has initiated a comprehensive investigation into alleged accounting discrepancies exceeding Rs 2,000 crore at IndusInd Bank. This action follows a preliminary inquiry conducted by the Economic Offences Wing (EOW) of the Mumbai Police. The SFIO’s investigation is being carried out under Section 212 of the Companies Act, focusing on potential irregularities in derivatives accounting and claims of profit overstatement.
Key figures, including former CEO Sumant Kathpalia and former Deputy CEO Arun Khurana, along with other senior officials, are currently under scrutiny. The EOW has previously recorded statements from approximately a dozen current and former employees, including members of the previous top management. Investigators are exploring all possible angles and have sought clarification from the Reserve Bank of India (RBI) regarding banking regulations, particularly those related to foreign currency hedging practices.
In addition to the reported accounting lapse of Rs 1,900–2,000 crore, an extra entry of around Rs 250 crore is also being investigated. Employees have informed investigators that foreign currency hedging was a standard banking practice. The EOW is now looking to the RBI for guidance on the permissibility of such practices under current regulations.
Sources indicate that bank officials claimed provisions were made whenever accounts indicated fund shortages, a practice allegedly in place since 2023. Investigators have noted that the trading desk was established under the oversight of then-Deputy CEO Arun Khurana, who was directly involved in its operations.
A Grant Thornton audit commissioned by the bank has also been referred to the police, with reports suggesting that the top management was aware of the accounting issues as early as 2023. The EOW is currently seeking legal advice to determine if these lapses constitute criminal wrongdoing.
The current management of IndusInd Bank has accused the former leadership of causing wrongful losses to the institution. Investigators are assessing whether these losses were merely notional, resulting from a decline in the bank’s share price and market capitalization following the disclosure of the accounting irregularities. Additionally, police are investigating claims that the former top management may have financially benefited from the accounting adjustments, which allegedly inflated the stock price, potentially leading to insider trading gains amounting to hundreds of crores.
The accounting issues, initially identified in the bank’s derivatives portfolio and later in its microfinance operations, prompted the resignations of CEO Sumant Kathpalia and Deputy CEO Arun Khurana in April 2025. The EOW has recorded statements from several employees and has interviewed Kathpalia, Khurana, and former CFO Gobind Jain multiple times, with the possibility of further summons if necessary. Jain had previously alleged treasury-related irregularities exceeding Rs 2,000 crore spanning nearly a decade.
As the investigation unfolds, the implications for IndusInd Bank and its former leadership remain significant, with potential legal consequences on the horizon.
**FAQ**
**What are the main allegations against IndusInd Bank?**
IndusInd Bank is facing allegations of accounting irregularities exceeding Rs 2,000 crore, including issues related to derivatives accounting and profit overstatement, leading to a major investigation by the SFIO.
