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Business Update: It is a warning for Indusind Bank how heavy can be ignored to ignore weak internal control and financial discipline. Now the bank is under pressure to win the trust of investors and present an example of transparency.
Business Update: For the first time in 18 years, Indusind Bank has suffered a quarterly loss. In the fourth quarter of FY 2024-25, the bank incurred a loss of Rs 2,236 crore, compared to Rs 2,347 crore in the same period last year. The frauds that surfaced in the internal audit have shook the bank’s credibility, due to which the top order resigned and the pressure on the bank to transparency and investors’s confidence has increased.
These disturbances became the reason for the quarterly deficit
Indusind Bank suffered a huge loss of Rs 2,236 crore in the fourth quarter of FY 2025, and two big frauds within the bank have played an important role behind it. Talking about the first case, it is associated with wrong accounting in the bank’s derivative portfolio, due to which the bank had to incur a loss of about Rs 1,966 crore in this area alone. This disturbance came to light in March when it was found in the internal audit that the bank did not record some derivative trades properly. The second major case is related to the microfinance portfolio, where an amount of about Rs 684 crore was incorrectly depicted as interest income for three quarters. The bank returned this entire amount in January 2025, but this has raised a big question on the credibility of the bank among investors and regulators.
CEO and Deputy CEO resign
The letter is seen that the most direct impact of any financial disturbance in the banking sector is on the leadership, and something similar was seen in the case of Indusind Bank. When flaws and forgery came out, different bags started moving inside the bank. Due to this, the bank’s CEO Sumant Kathpalia and Deputy CEO Arun Khurana resigned from their posts on 29 April. These resignations clearly indicated that the bank is taking the failure of governance and internal control seriously. This step was also necessary to assure investors and markets from the bank that it is giving top priority to transparency and responsibility. However, it is also clear from these resignations that there have been mistakes under monitoring at the top level of the bank, whose results are now coming out in public.
Terroric strictness and investors’ pressure
This scam of Indusind Bank has not only damaged the image of the bank, but has also brought the bank under question in the eyes of regulators and investors. The bank appointed a large external audit agency like PriecWaterhouseCoopers (PWC) and conducted an independent inquiry into the entire matter, which has predicted a negative impact of Rs 1,979 crore by 30 June 2024 in its report. Also, due to derivative disturbances, the bank’s net worth is expected to be impacted by 2.35% by December 2024. It is clear from these figures that in the coming months, the bank will not only face a big challenge of winning the trust of investors in the market. The bank will now have to strengthen a renewed operation and control system by learning from its mistakes.
