IndusInd Bank external audit reveals Rs 1,979 crore derivative discrepancies

On March 10, 2025, the bank had disclosed that it noted certain discrepancies in accounts balances of its derivative portfolio. The internal review by the bank had estimated an adverse impact of approximately 2.35 per cent of the bank’s net worth as of December 2024.

As per RBI directives on investments issued in September 2023, banks are prohibited from conducting internal trades/ hedging and, accordingly, IndusInd Bank too ceased internal trades from April 1, 2024. However, during an internal review, the bank identified certain discrepancies where accounting of losses on forex derivatives/ swap transactions executed prior to April 2024 (over the past 5-7 years) to hedge forex deposits/ debt were not recognised through NII (net interest income), while the corresponding treasury gains were recognised in the P&L. Derivatives are used by treasury department to convert forex deposits/ borrowings into the rupee.

According to banking sources, it is probable that the bank was aware of the scale of the issue long before they claimed to have discovered it, and that the disclosure was prompted by the RBI. The bank’s handling of internal trades and accrued interest differential has raised questions, as it appears that these transactions were not fully unwound on a daily basis. As a result, the loss accumulated over time instead of being adjusted gradually. This is a likely breach of accounting norms.