IndusInd Bank, grappling with a major accounting lapse, has appointed Grant Thornton Bharat to conduct a forensic review of discrepancies in its derivatives portfolio, amounting to approximately ₹1,577 crore over the past six years. The issue arose after the bank engaged in certain non-compliant internal trades, leading to misstatements in its financial records.

According to sources, the external investigation will examine the root causes of the discrepancies, determine the nature of misstatements in financial records, assess potential fraud—including money laundering risks—and bring accountability for the lapses in accounting treatment.

The forensic review mandate has been given to an advisory firm of Grant Thornton Bharat and not to the audit firm (Walker Chandiok & Co), sources added.

Subject to Grant Thornton Bharat’s final review, IndusInd Bank plans to fully account for the discrepancy in its fourth-quarter financial statements. Despite the setback, the bank maintains that its profitability and capital adequacy are strong enough to absorb the one-time impact.

On March 10, IndusInd Bank disclosed the issue in a stock exchange filing, revealing that the ₹1,577 crore discrepancy represents approximately 2.35 per cent of its net worth as of December 2024.

The Reserve Bank of India (RBI) on March 15 sought to reassure IndusInd Bank’s customers, stating that the lender remains “well-capitalised” despite the recently uncovered derivatives accounting discrepancy. The central bank has directed the bank’s board to complete remedial actions related to the issue within this month.

Without naming the independent professional services firm, IndusInd Bank had on Thursday last said it’s board had decided to appoint an external firm to conduct a comprehensive investigation.

“…board of directors at its meeting held on Thursday (March 20, 2025), decided to appoint an independent professional firm to conduct a comprehensive investigation to identify the root cause of the discrepancies, assess the correctness and impact of the accounting treatment of the derivative contracts with regard to the prevailing accounting standards”, the bank said in a regulatory filing.

The revelation of the ₹1,577 crore discrepancy has significantly impacted IndusInd Bank’s stock, which has plunged 27 per cent since the news broke, wiping out nearly ₹19,000 crore in market capitalisation.

In response, Moody’s Ratings has placed IndusInd Bank’s baseline credit assessment under review for a potential downgrade, citing concerns over weaknesses in risk management, compliance, and financial reporting.

As the forensic investigation by Grant Thornton Bharat progresses, stakeholders are keenly watching for further clarity on the implications of the discrepancies and the steps the bank will take to strengthen its internal controls and restore investor confidence, according to industry experts.

Meanwhile, IndusInd Bank last week strongly denied a media report by a foreign news agency that claimed the RBI had advised the bank’s CEO and his deputy to step down over the accounting lapses once suitable replacements were found.

Commenting on behalf of the promoters of the bank, Ashok P Hinduja, Chairman of IIHL (IndusInd International Holdings Ltd) had few days back said that he was awaiting the report of the external agency, but was uncomfortable about the corporate governance at the bank.