Private sector lender IndusInd Bank on Wednesday said that the Serious Fraud Investigation Office (SFIO) is investigating the affairs of the bank under Section 212 of the Companies Act, 2013, and has sought relevant information from the lender.
What did IndusInd Bank tell exchanges about the SFIO investigation?
Last week, the bank had notified the exchanges that SFIO interacted with its officials and would send a written communication seeking specific details related to the accounting discrepancies identified at the bank.
“…we hereby inform that the bank has received a letter dated December 23, 2025, from SFIO, regarding an investigation into the affairs of IndusInd Bank Limited under Section 212 of the Companies Act, 2013, seeking relevant information,” the lender said in an exchange notification. “The bank continues to give full cooperation and support to the law enforcement agencies,” it added.
Why was an SFIO probe ordered, as per earlier reports?
What did the bank disclose about derivatives accounting discrepancies?
In March 2025, the bank disclosed that an internal review had found discrepancies in its derivatives portfolio and subsequently appointed external agencies to assess the extent of the impact and identify the root cause.
Investigations revealed that the bank had carried out several derivatives transactions between FY16 and FY24 where the accounting treatment was not in line with prescribed accounting guidelines. This led to the recognition of notional income in the profit and loss account, with corresponding balances reflected under assets over multiple years. The bank has since written off Rs 1,959.98 crore of such accumulated notional profits in FY25.
What did the bank say about “other assets”, “other liabilities” and microfinance income?
In addition, the lender set off Rs 595 crore of unsubstantiated balances under “other assets” and “other liabilities”. Further, a review of the microfinance portfolio also revealed incorrect recognition of interest income of Rs 673.82 crore and fee income of Rs 172.58 crore. The reversal of these entries resulted in an adverse impact of Rs 422.56 crore in Q4 FY25.
What did the bank say about microfinance loan classification and provisions?
The bank also identified misclassification of certain microfinance loans as standard assets, along with the accrual of interest income on these accounts. After correcting the classification, it provided for these loans at 95 per cent, amounting to Rs 1,791 crore. The provision, along with the reversal of interest income, led to an adverse impact of Rs 1,969 crore on the profit and loss account as on March 31, 2025.
How did these issues affect IndusInd Bank’s Q4 FY25 results?
The bank reported a net loss of Rs 2,329 crore in the January-March quarter (Q4 FY25), after sharply increasing provisions and reversing incorrectly booked revenue and income entries linked to accounting discrepancies in its derivatives and microfinance businesses identified during the quarter.
