IndusInd Bank Reports Loss for the First Time in 20 Years

Employees Suspected of Fraud; Shares Plummet

For the first time in two decades, Mumbai-based private lender IndusInd Bank Limited has reported a net loss of ₹2,328 crore for the January-March quarter. The bank suspects that internal fraud by some employees led to significant accounting errors, which severely impacted its quarterly results.

Major Quarterly Loss Due to Internal Discrepancies

The bank was shaken by a loss of over ₹2,000 crore in the final quarter of the last financial year. This marks the first time in 20 years that the bank has reported a quarterly loss of this magnitude. On Wednesday, May 21, IndusInd Bank officially disclosed the financial hit.

According to a Reuters report, the bank suspects that fraud committed by some employees caused critical errors in accounting. These discrepancies ultimately reflected in the bank’s financial results.

Comparison with Previous Year’s Performance

An India Today report highlighted that IndusInd Bank reported a loss of ₹2,236 crore for the January-March quarter. In contrast, during the same period last year, the bank had posted a profit of ₹2,347 crore. This is the first time in 18 years that India’s fifth-largest private lender has slipped into the red, largely due to internal mismanagement.

Net Interest Income Falls by 43%

The bank’s Net Interest Income (NII) also took a substantial hit, plunging 43%. It fell from ₹5,376 crore to ₹3,048 crore during the reported quarter.

Fraud Involving Employees Under Investigation

In a statement released on Wednesday, the bank disclosed that its board suspects fraudulent activity involving certain employees who played key roles in accounting and financial reporting. The issue is currently under investigation and involves two major incidents:

1. Misreporting in Derivative Trades

The first instance of loss was due to inaccurate accounting of derivative trades, leading to a loss of ₹1,966 crore in the financial year ending March 31. This discrepancy came to light in March.

2. Microfinance Portfolio Irregularities

The second issue involves the misrepresentation of interest income from the microfinance portfolio. An investigation revealed that approximately ₹684 crore was incorrectly recorded as interest income over three quarters of the financial year.

Leadership Shake-up Following the Scandal

These irregularities have triggered significant changes within the bank. Following mounting pressure and questions about management integrity, CEO Sumant Kathpalia and Deputy CEO Arun Khurana resigned from their positions last month.