MUMBAI: IndusInd Bank will take a charge of Rs 1,956 crore in the fourth quarter of FY25 to correct longstanding discrepancies in its derivatives valuation. The private lender also plans to hold employees accountable for the lapses that inflated its reported profits over several years.
In a disclosure to stock exchanges, the bank said that an independent investigation, commissioned in March 2025, had confirmed an adverse accounting impact of Rs 1,960 crore as of March 31st. The investigation report was submitted on Saturday and taken up by the board which met for the purpose on Saturday and Sunday. The bank has not revealed the name of the external agency which was appointed by the bank, but sources said that it was Grant Thornton.
The discrepancies stemmed from internal derivative trades between the asset-liability management desk and the treasury, which used accrual accounting, while external counterparties’ trades were marked to market. This mismatch allowed IndusInd to defer losses internally while prematurely booking gains externally, overstating earnings. The bank began internal derivatives trade between its asset-liability management desk and treasury in 2017-18, mostly hedging foreign currency borrowings in yen and dollars.A regulatory intervention in Sept 2023, when the RBI tightened derivatives accounting rules, prompted an internal review.
The central bank subsequently banned internal derivatives trades from April 2024, forcing IndusInd to unwind its positions. In March 2025, the bank warned of a Rs 1,600 crore pre-tax hit.