Shares of IndusInd Bank fell up to 6.3% on Tuesday to Rs 776.15 on the BSE after the lender appointed EY to conduct a second forensic audit to probe a Rs 600 crore discrepancy in its microfinance portfolio, deepening concerns about governance and accounting lapses.
The decision to rope in EY comes as the bank’s statutory auditors flagged the issue during their review of the financials for the year ended March 2025. The bank issued an additional communication under Section 143(12) of the Companies Act, which mandates the reporting of suspected fraud.
EY, which has India’s largest forensic practice, will investigate whether the discrepancy stemmed from fraud and determine accountability, said two people with direct knowledge of the matter.
The probe is in addition to an ongoing forensic audit by Grant Thornton Bharat into irregularities in the bank’s forex derivatives book.
“It is not an issue that spans multiple years. It seems to have occurred in the last financial year, possibly within the second and third quarter of the fiscal,” a source close to the development told The Economic Times. “But EY will investigate if there was any fraud committed.”
Also read | IndusInd ropes in EY to conduct another audit, to probe Rs 600cr discrepancy in microfinance portfolio
A person familiar with the bank's decision said the board was compelled to bring in EY due to time constraints, as Grant Thornton's report is expected by the end of April. EY’s affiliate SR Batliboi & Co. had earlier served as the bank’s auditor during FY2019, and EY consultants helped the management review its derivatives portfolio in the March 2024 quarter.
Investor sentiment has already been shaken by earlier revelations. In a disclosure to the exchanges on April 15, IndusInd said PwC — hired to review its derivatives portfolio — had estimated potential post-tax losses of Rs 1,979 crore, higher than the initial Rs 1,600 crore estimate. PwC’s report included significant disclaimers, according to one of the sources.
The bank quantified the accounting impact at 2.27% of its net worth as of December 2024, based on its June 2024 profit and loss figures.
Shares of IndusInd Bank have declined 46% over the past year and are down 16.6% in the last three months. Despite a 16.6% gain in the past month, the stock remains under pressure, trading below four of its eight key simple moving averages — the 50-day, 100-day, 150-day, and 200-day SMAs. The 14-day Relative Strength Index stands at 62.2, indicating the stock is neither overbought nor oversold.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
The decision to rope in EY comes as the bank’s statutory auditors flagged the issue during their review of the financials for the year ended March 2025. The bank issued an additional communication under Section 143(12) of the Companies Act, which mandates the reporting of suspected fraud.
EY, which has India’s largest forensic practice, will investigate whether the discrepancy stemmed from fraud and determine accountability, said two people with direct knowledge of the matter.
The probe is in addition to an ongoing forensic audit by Grant Thornton Bharat into irregularities in the bank’s forex derivatives book.
“It is not an issue that spans multiple years. It seems to have occurred in the last financial year, possibly within the second and third quarter of the fiscal,” a source close to the development told The Economic Times. “But EY will investigate if there was any fraud committed.”
Also read | IndusInd ropes in EY to conduct another audit, to probe Rs 600cr discrepancy in microfinance portfolio
A person familiar with the bank's decision said the board was compelled to bring in EY due to time constraints, as Grant Thornton's report is expected by the end of April. EY’s affiliate SR Batliboi & Co. had earlier served as the bank’s auditor during FY2019, and EY consultants helped the management review its derivatives portfolio in the March 2024 quarter.
Investor sentiment has already been shaken by earlier revelations. In a disclosure to the exchanges on April 15, IndusInd said PwC — hired to review its derivatives portfolio — had estimated potential post-tax losses of Rs 1,979 crore, higher than the initial Rs 1,600 crore estimate. PwC’s report included significant disclaimers, according to one of the sources.
The bank quantified the accounting impact at 2.27% of its net worth as of December 2024, based on its June 2024 profit and loss figures.
Shares of IndusInd Bank have declined 46% over the past year and are down 16.6% in the last three months. Despite a 16.6% gain in the past month, the stock remains under pressure, trading below four of its eight key simple moving averages — the 50-day, 100-day, 150-day, and 200-day SMAs. The 14-day Relative Strength Index stands at 62.2, indicating the stock is neither overbought nor oversold.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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