IndusInd Bank’s shares declined by 6.3% to Rs 776.15 on the BSE on Tuesday following the appointment of EY to investigate a Rs 600 crore irregularity in its microfinance portfolio, raising additional concerns about governance standards and accounting issues.At 1:24 AM, shares of IndusInd Bank were trading at Rs 792.20, down Rs 36 or 4.33%.
The bank engaged EY after statutory auditors identified the matter whilst reviewing financial statements for the year ended March 2025. The bank submitted supplementary communication under Section 143(12) of the Companies Act, which requires reporting of potential fraudulent activities.
EY, recognised for having India’s most extensive forensic division, will assess whether the irregularity involves fraudulent activities and establish responsibility, according to two individuals directly familiar with the situation.
This investigation is separate from the current forensic audit being conducted by Grant Thornton Bharat regarding irregularities in the bank’s forex derivatives operations.
“It is not an issue that spans multiple years. It seems to have occurred in the last financial year, possibly within the second and third quarter of the fiscal,” a source close to the development told ET. “But EY will investigate if there was any fraud committed.”
A source close to the matter told the financial daily that the bank’s board had to engage EY due to timing pressures, as Grant Thornton’s findings are due by April’s end. Previously, EY’s affiliate SR Batliboi & Co. served as the bank’s auditor in FY2019, whilst EY consultants assisted in reviewing the derivatives portfolio in March 2024.
Previous disclosures have negatively affected investor confidence. IndusInd’s exchange filing on April 15 revealed that PwC’s review of the derivatives portfolio indicated potential post-tax losses of Rs 1,979 crore, exceeding the initial Rs 1,600 crore projection. Sources indicate that PwC’s report contained substantial disclaimers.
The bank calculated the accounting impact at 2.27% of its net worth as of December 2024, utilising its June 2024 profit and loss data.
IndusInd Bank shares have experienced a 46% decline over the past year, with a 16.6% reduction in the previous quarter. Despite recording a 16.6% increase in the last month, the shares continue to face downward pressure, trading below four crucial simple moving averages: the 50-day, 100-day, 150-day, and 200-day SMAs. The 14-day Relative Strength Index reads 62.2, suggesting the stock is in a neutral position.
