IndusInd Bank shares plunged nearly 6% on Friday after the private lender revealed fresh accounting errors in its microfinance business. The bank’s stock dropped sharply to ₹735.95 during intraday trading on the BSE, before recovering slightly to ₹755.80 by mid-morning.
What’s Happening with IndusInd Bank?
IndusInd Bank disclosed that its Internal Audit Department (IAD) found ₹674 crore wrongly recorded as interest income over three quarters in FY 24-25. The bank fully reversed this entry on January 10, 2025. But that’s not all. A whistleblower complaint triggered a deeper probe into “other assets” and “other liabilities.”
The audit revealed ₹595 crore of unsubstantiated balances in these accounts. The bank offset these amounts in January 2025.
The audit also looked into employee roles linked to these lapses. The board has promised to tighten internal controls and hold responsible people accountable.
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What Does This Mean for You?
If you are an investor or a customer, this news is a red flag. Accounting errors of this scale raise questions about the bank’s governance and transparency. When your money is in a bank, you want it managed well — not tangled in financial shenanigans. And for the average person, the worry is simple: could this impact the bank’s stability or your savings?
The Bigger Picture: Mounting Troubles for IndusInd Bank
This isn’t the first time IndusInd Bank has faced accounting issues. In March, the bank reported lapses in its derivative portfolio, impacting about 2.35% of its net worth as of December 2024. PwC was hired to assess the damage, estimating the negative impact at ₹1,979 crore by June 30, 2024.
The fallout led to the resignation of CEO Sumant Kathpalia and Deputy CEO Arun Khurana on April 29. For now, a Committee of Executives runs the bank, pending a new CEO appointment. Meanwhile, Grant Thornton is conducting a forensic audit into the accounting problems.
Brokerages Lose Confidence, Downgrade Stock
Brokerages reacted quickly. CLSA downgraded IndusInd Bank shares from ‘Outperform’ to ‘Hold’ and cut the target price from ₹900 to ₹780. Investec was even harsher, downgrading the stock to ‘Sell’ and lowering its price target to ₹650 from ₹700.
One analyst summed it up: the bank has “disclosed ₹1,960 crore of overreported income over 5-7 years.” Assuming 25% of that was in FY24 alone, the bank’s net interest margin (NIM) suffers a permanent hit of 10 basis points. Translation: profits could be lower for a while.
What’s Next for IndusInd Bank?
The situation is serious. But banks, like people, can recover if they own up and fix problems fast. The key is how quickly IndusInd’s new leadership can restore trust with customers and investors.
For now, keep an eye on this story — and your investment portfolio if you hold IndusInd shares.
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