Troubles for IndusInd bank don’t seem to ebb. Just weeks after the CEO and deputy CEO resigned following a derivatives accounting discrepancies, the bank in an exchange filing clarified that the internal audit team had found incorrect interest income entries amounting to Rs 674 crore, spread over three quarters of FY25.
As per the regulatory filing, “We refer to the disclosure made by the Bank on April 22, 2025, wherein we had disclosed that the Bank’s Internal Audit Department (IAD) was conducting a review of the Bank’s MFI business to examine certain concerns which had been brought to the Bank’s attention.”
IndusInd Bank statement on wrong entries
“The IAD has since submitted its report on May 8, 2025. Based on the report, it is noted that a cumulative amount of Rs. 674 crores was incorrectly recorded as interest over three quarters of FY 24-25, which was fully reversed as on January 10, 2025,” added the filing.
The audit also flagged Rs 595 crore worth of unexplained balances in the bank’s “other assets” account, which were adjusted against entries in “other liabilities”.
“Also, pursuant to receipt of a whistle blower complaint, the IAD was asked by the Audit Committee of the Board to review transactions recorded in “other assets” and “other liabilities”. The IAD has submitted its report on May 8, 2025 that there were unsubstantiated balances aggregating to Rs. 595 crores in “other assets” accounts of the Bank. These were set off against corresponding balances appearing in “other liabilities accounts in January 2025,” said the company in the exchange filing.
“The IAD has also examined the roles and actions of key employees in this context. The Board is taking necessary steps to strengthen internal controls, fix accountability of the persons responsible for these lapses and will take action as appropriate,” it added.
IndusInd Bank: What happened so far
On April 15, IndusInd Bank disclosed there could be potentially Rs 1,979 crore impact on FY25 earnings as a result of accounting discrepancies. Grant Thornton, the forensic auditor, delivered its report on April 26 and the next day IndusInd Bank confirmed Rs 1.960 crore impact. The bank assured shareholders that it will take steps to strengthen internal controls in the bank and re-align roles on April 28. Meanwhile, the bank’s top leadership, the CEO and the deputy CEO resigned on April 29.
Brokerages cautious on IndusInd Bank
Brokerage firms have started reassessing their stance on the stock.
CLSA downgrades IndusInd Bank
CLSA has downgraded IndusInd Bank to Hold with a target price of Rs 780. According to the well known brokerage house, the “audit report,highlighted that Rs 674 crore was incorrectly recorded as interest income in 9MFY25 and this will be reversed in Q4FY25. This adjustment, according to CLSA implies its core NIM was 17 bps lower than its reported NIM. As a result they have profit estimates for FY26-27 by 13-17%.
Morgan Stanley on IndusInd Bank
As per CNBCTV18, Morgan Stanley has said earnings forecasts for FY26 and FY27 could be trimmed by as much as 15-20%. The brokerage has maintained an “equal-weight” rating, with a price target of Rs 755.
IndusInd Bank share performance
IndusInd Bank’s share price has been trading on a negative note for a long time. In just the last five days, the share price has dropped by nearly 5%. Over the past one month, it is down 1%, but zoom out a bit and the picture looks worse. In the past six months, the stock has fallen by 22% and over the past year, it plunged by a steep 45%. Since the start of 2025, it is down by 20%.