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Key Points

IndusInd Bank is facing a significant financial challenge after discovering a Rs 172.58 crore accounting irregularity in its microfinance business. The bank's promoter, Ashok P. Hinduja, has stepped forward to reassure stakeholders about the bank's stability and commitment to transparency. Regulatory bodies like RBI and SEBI have initiated investigations into the potential fraud and accounting discrepancies. Despite the setback, Hinduja remains confident that the bank can rebuild trust and maintain its long-standing reputation in the financial sector.

Key Points: Hinduja Supports IndusInd Bank Amid Rs 2,236 Crore Fraud Probe

  • RBI and SEBI launch investigations into IndusInd Bank accounting discrepancies
  • Bank reports Rs 172.58 crore incorrect fee income
  • Hinduja commits to supporting bank's capital needs
  • CEO abruptly sacked after widespread irregularities discovered
3 min read

Hinduja goes into damage-control mode as fraud rocks IndusInd Bank

IndusInd Bank faces major fraud investigation, with promoter Ashok P. Hinduja pledging support and transparency amid RBI and SEBI scrutiny

"This shall be a new dawn with a sanitised slate to regain the position the Bank enjoyed for many decades - Ashok P. Hinduja"

New Delhi, May 22

Ashok P. Hinduja, Chairman, IndusInd International Holdings Limited (IIHL) which is the promoter of IndusInd Bank, went into damage-control mode on Thursday following the announcement of the fraud in the bank that has plunged the lender into a Rs 2, 236 crore loss for the January-March quarter.

“Though the capital adequacy of the Bank is quite healthy, for business growth, should any further equity be required, IIHL, as the promoter of IBL, remains committed to supporting the Bank, as it has done over the past 30 years,” Hinduja said in a statement.

The RBI has launched investigations into the accounting discrepancies at IndusInd Bank.

The Securities and Exchange Board of India (SEBI) is also investigating possible violations in the IndusInd Bank case, following the bank's disclosure of suspected fraud and concerns over insider trading, SEBI Chairman Tuhin Kanta Pandey said on Thursday.

IndusInd Bank said on Wednesday that its Board suspects a fraud involving certain employees, who played a significant role in the lender's accounting and financial reporting, and has directed all necessary actions to be taken under applicable laws, including reporting the matter to regulatory authorities and investigative agencies.

IndusInd Bank’s internal audit department found on May 20 that Rs 172.58 crore had been incorrectly recorded as fee income in the Microfinance (MFI) business over three quarters ending the December quarter, which has since been reversed in the fourth quarter of FY25.

The disclosure follows the abrupt sacking of the IndusInd Bank CEO last month after widespread irregularities were discovered in its foreign exchange derivatives and microfinance portfolio.

Meanwhile Hinduja said, “The stance of the Regulator in addressing the issues in a very orderly manner with suitable guidance, as demonstrated by them in past for the banking sector, is commendable.”

He also expressed “continued, unequivocal trust in the Chairman & Board of Directors of the Bank for their appropriate, swift actions in order to address discrepancies and attendant areas of concern.”

This would lead to higher standards of transparency and governance, leading to rebuilding trust in the Bank. The coordinated efforts of current management under the guidance and monitoring of the Board and other stakeholders have ensured that the bank’s business remains healthy, with robust capital adequacy, he said

“The continued confidence of the customers in the Bank shows their trust in the institution, which has always been upheld. This shall be a new dawn with a sanitised slate to regain the position the Bank enjoyed for many decades,” Hinduja added.

- IANS

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Reader Comments

R
Rahul K.
Very disappointing to see such a reputed bank involved in accounting fraud. Just last month I was considering opening an account with them. Now I'll wait until RBI completes its investigation. Hope SEBI takes strict action against those involved. 🏦
P
Priya M.
As a shareholder, I'm deeply concerned about this development. The Hinduja statement sounds reassuring but actions speak louder than words. The board needs to demonstrate real accountability, not just damage control PR. My portfolio has taken a hit because of this.
S
Sanjay T.
This is why I prefer nationalized banks over private ones. At least with PSU banks, there's more transparency and accountability to Parliament. Private banks only care about profits and bonuses. Shameful!
A
Ananya R.
The microfinance sector is already struggling with NPAs and now this fraud comes to light. It's the poor borrowers who will ultimately suffer. RBI should conduct special audits of all banks' MFI portfolios. Jai Hind!
V
Vikram S.
The timing is suspicious - just after the CEO was sacked. Were they trying to hide this during the leadership transition? Full marks to the internal audit team for catching this, but why did it take 3 quarters? Needs deeper investigation.
N
Neha P.
As a customer for 8 years, I've had good experiences with IndusInd. While this fraud is serious, I appreciate that they disclosed it voluntarily. Hope they clean house properly. The banking sector needs more whistleblower protection though.

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