IndusInd Bank derivatives accounting episode: what the public record shows
IndusInd Bank derivatives accounting episode: what the public record shows: a public-record watch file compiled by Falling Shares Intelligence from filings and exchange disclosures, as of 2026-11-08. In March 2025 IndusInd Bank disclosed discrepancies in its derivatives portfolio that it said could reduce net worth by about 2.35% as of December 2024; an external review put the adverse cumulative impact at about ₹1,979 crore (reported figures vary between roughly ₹1,960 and ₹1,979 crore).
A derivatives-accounting discrepancy, two senior exits, a SEBI insider-trading interim order and an SFIO inquiry — alongside the bank's capital position and its return to profit.
Falling Shares Intelligence, Edited by Wung Thomas, Editor-in-Chief. As of .
Summary
- In March 2025 IndusInd Bank disclosed discrepancies in its derivatives portfolio that it said could reduce net worth by about 2.35% as of December 2024; an external review put the adverse cumulative impact at about ₹1,979 crore (reported figures vary between roughly ₹1,960 and ₹1,979 crore).
- The MD and CEO and the Deputy CEO resigned on 29 April 2025, and the board set up a committee of executives to run the bank.
- A separate internal review flagged ₹595 crore of unsubstantiated "other assets" balances and ₹674 crore of wrongly booked microfinance interest income; Grant Thornton was appointed for a forensic audit.
- SEBI's 28 May 2025 interim order restrained the former CEO, former Deputy CEO and three other officials from the securities market over alleged insider trading and impounded ₹19.78 crore. The Ministry of Corporate Affairs directed an SFIO inquiry from late December 2025.
- By the quarter ended March 2026 the bank reported a return to profit; no final regulatory or court finding against any individual was found.
Key figures
| Derivatives adverse impact (reported) | ₹1,959.98–1,979 crore (Sources differ on the exact figure and date) |
|---|---|
| Net-worth impact flagged by bank | ~2.35% (As of 31 Dec 2024) |
| SEBI impounding order | ₹19.78 crore (Interim order, 28 May 2025) |
| Q4 FY25 net loss | ~₹2,236 crore (standalone) (Reports cite ₹2,329 crore on a different basis) |
| Q4 FY26 net profit | ₹594 crore (consolidated) (Standalone ₹532.71 crore per another report) |
The discrepancies and reviews
Derivatives accounting discrepancy disclosed
The bank said mark-to-market losses on its internal derivatives book could reduce net worth by up to 2.35% as of December 2024. The RBI directed a review; PwC reviewed derivative transactions and Grant Thornton Bharat was appointed for forensic work. (Mar 2025)
Independent review quantifies impact
A review reported the adverse cumulative impact of ₹1,959.98 crore on profit and loss as of 31 March 2025; PwC was reported to have estimated ₹1,979 crore as of 30 June 2024. Main finding: incorrect accounting of internal derivative trades, especially early terminations that booked notional profits. (2025)
Other balance-sheet discrepancies
Following a whistleblower complaint, the internal audit department (with EY support) found ₹595 crore of unsubstantiated other-asset balances, adjusted in January 2025, and ₹674 crore wrongly booked as interest income over three quarters, reversed by 10 January 2025. Later reports also cite ₹172.6 crore of misclassified fee income. (Jan–May 2025)
Rating outlook
Moody's affirmed the bank's rating but moved the outlook to negative, citing weak internal controls, oversight and succession, and lowered the standalone profile from ba1 to ba2. (2025)
Leadership and proceedings
CEO and Deputy CEO resign
Sumant Kathpalia resigned as MD and CEO, citing moral responsibility for the derivatives lapses; Arun Khurana resigned as Deputy CEO. The board constituted a committee of executives to run the bank. (29 Apr 2025)
SEBI interim order on alleged insider trading
SEBI restrained the former MD and CEO, the former Deputy CEO and three other senior officials from the securities market, alleging trades between 4 December 2023 and 10 March 2025 in the bank's shares while in possession of unpublished price-sensitive information, and impounded ₹19.78 crore of alleged avoided losses. (28 May 2025)
SFIO inquiry ordered
The Ministry of Corporate Affairs reportedly directed the SFIO to investigate from late December 2025, examining possible account manipulation, misclassification and related issues, and summoning the former CEO, former CFO and former Deputy CEO for explanations. (Dec 2025 – Mar 2026)
Financial position
Loss in Q4 FY25, return to profit in Q4 FY26
The bank reported a net loss of about ₹2,236 crore (standalone) for Q4 FY25; for Q4 FY26 it reported net profit of ₹594 crore consolidated and declared a ₹1.5 dividend. Q1 FY27 profit was reported at about ₹1,003–1,037 crore depending on basis. (Apr 2025 – Apr 2026)
Evidence that cuts the other way
Bank says capital can absorb the hit
The bank said it had sufficient capital to absorb the impact, and current management has said it is strengthening internal controls and fixing accountability. (2025)
Police preliminary inquiry reportedly found no siphoning
The Economic Offences Wing reportedly found no evidence of fund siphoning or diversion in its preliminary inquiry and was preparing to close it, while seeking RBI's view on whether the hedging practices were permitted. (2026)
Operational recovery
The bank returned to profit in Q4 FY26 and reported improved asset quality in Q1 FY27. (2026)
Standard
This file compiles company disclosures, regulator orders and published reporting about IndusInd Bank Limited. Allegations are attributed to the regulator or outlet that reported them. SEBI's insider-trading order is an interim, ex-parte order. Former officers are named only as they appear in official orders and reports, with their procedural status; none has been found guilty by a court or final regulatory order in the sources we reviewed. This is news coverage for information only, not investment advice.
Right of reply
IndusInd Bank Limited, and anyone named in a record cited here, can send corrections or comments to info@fallingshares.com (or directly to the Editor-in-Chief, Wung Thomas, at wungthomas@fallingshares.com). Material responses will be published alongside the relevant entry.