External agency confirms discrepancies in IndusInd Bank’s derivatives portfolio; estimates ₹1,979 crore loss
IndusInd Bank MD and CEO Sumant Kathpalia, in an investor call last month, said that the bank will likely report net profit in Q4FY25 despite taking into account the one-time loss.
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The external agency appointed by IndusInd Bank has confirmed that it has found discrepancies in the latter’s derivatives portfolio, and estimated a ‘negative impact’ of ₹1,979 crore on the bank’s financials as on June 30, 2024, the lender said in an exchange filing. The bank had appointed PwC to estimate the overall loss, said sources.
“The bank has since received the report from the external agency on 15th April 2025 which has identified discrepancies, inter alia, relating to derivative deals. The report has quantified the negative impact of the above as of 30th June 2024 at ₹1,979 crore. Based on the report, the bank has assessed an adverse impact (on a post-tax basis) of 2.27 per cent to the bank’s net worth as of December 2024 on account of these discrepancies,” it said. The bank’s net worth stood at ₹65,102 crore as of December 2024.
IndusInd Bank said the impact of loss will be reflected in its financial statements for FY25. The lender will continue to take “suitable steps” to augment its internal controls pertaining to the derivative accounting operations. IndusInd Bank MD and CEO Sumant Kathpalia, in an investor call last month, said that the bank will likely report net profit in Q4FY25 despite taking into account the one-time loss.
Future course of action
The CEO said as a part of the RBI circular, which came in September 2023, the lender started reviewing its derivatives book. Per the new guidelines effective April 1, 2024, the internal trades had to be discontinued. “We started reviewing whatever our internal trade book was and started observing some discrepancies in our businesses which were identified by September-October, and then we hired an external agency to examine our businesses. That is why we are comfortable that by March-end or early April we will be able to identify the gaps,” he had said during the call.
It is to be noted that the Reserve Bank of India (RBI) had recently approved re-appointment of Kathpalia only for one year as the bank chief as against the bank Board’s recommendation of three years. This was the second time that the RBI did not approve a three-year term for Kathpalia.
In a post-monetary policy committee meeting (MPC) press conference earlier this month, RBI Deputy Governor Swaminathan J had said the regulator “never wastes a good crisis” and that there will be learnings and supervisory tools will get better as such episodes play out. “It is our intention to minimise such episodes and ensure that customers remain protected even if accidents play out…we also direct the boards to ensure proper forensic and accountability studies are held and then whoever is accountable, actions will play out. If there were any lapses, it will be dealt with appropriately,” he said.
Published on April 15, 2025
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