SFIO Probes IndusInd Bank Over Accounting Irregularities

The Serious Fraud Investigation Office (SFIO) has launched an investigation into the affairs of private sector lender IndusInd Bank under Section 212 of the Companies Act, 2013. The agency has sought relevant information from the bank’s management as part of the probe.

According to earlier reports, the Ministry of Corporate Affairs (MoCA) ordered the SFIO investigation citing public interest concerns, following statutory audit and forensic reports that pointed to significant accounting irregularities at the bank.

In March 2025, IndusInd Bank disclosed through an internal review that it had identified discrepancies in its derivatives portfolio. Subsequently, the bank appointed external firms to assess the extent of the impact and determine the root cause of the issue.

Investigations revealed that in several derivatives transactions carried out between FY2016 and FY2024, the bank’s accounting practices were 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 for several years. In FY2025, the bank wrote off ₹1,959.98 crore of such accumulated notional profits.

Additionally, the bank adjusted unverified balances amounting to ₹595 crore under “Other Assets” and “Other Liabilities.” A review of the microfinance portfolio further revealed that ₹673.82 crore in interest income and ₹172.58 crore in fee income had been incorrectly recognized. The reversal of these entries resulted in an adverse impact of ₹422.56 crore in the fourth quarter of FY2025 (Q4FY25).

The bank also found that certain microfinance loans had been incorrectly classified as standard assets, with interest income accrued on those accounts. After correcting the classification, IndusInd Bank made provisions of 95 percent, amounting to ₹1,791 crore, against these loans. The provisioning and reversal of interest income together had a negative impact of ₹1,969 crore on the profit and loss account as of March 31, 2025.