Mumbai Police launches probe into IndusInd accounting lapses

Mumbai: The Mumbai Police have launched a preliminary enquiry (PE) on a complaint filed by private sector lender IndusInd Bank alleging financial irregularities by some of its former key managerial personnel, people in the know told ET.

No first information report has been registered as yet and the enquiry is at the assessment stage, the people said. A PE is conducted to determine if a cognisable offence has occurred. An FIR is filed if an offence is prima facie established, or the case is closed for want of evidence.

The Economic Offences Wing of the city police, which is handling the case, has recorded statements from staffers linked to a former chief financial officer of the bank and members of the accounts department, the people said.


The bank did not respond to ET's queries until press time Tuesday.

IndusInd Bank in March disclosed a ₹1,979 crore accounting lapse in its derivatives portfolio. An internal audit later found ₹674 crore wrongly booked as interest from the microfinance business and ₹595 crore in "unsubstantiated balances" under "other assets".

According to a senior police officer, the investigation is focused on two key questions: why notional profits were reflected in the bank's balance sheet, and whether certain senior executives offloaded shares before the lapses were made public, making illegal gains. "If required, these former KMPs will be called in for questioning," the officer said. A PE allows the police to summon people linked to a case.

While the Securities and Exchange Board of India is also probing the matter for possible securities law violations, the police enquiry is over possible criminal offences, including wilfully causing a loss to the lender.

"The enquiry commenced after the bank wrote to us about the alleged irregularities. The statements of those recorded so far, along with key digital data, are being scrutinised," the officer said.

IndusInd Bank, India's sixth largest lender, is working on restoring investor confidence in it after the derivatives fiasco. Earlier this month, the Hinduja Group-promoted bank appointed veteran banker Rajiv Anand as its managing director and chief executive. His appointment followed the sudden exits of CEO Sumant Kathpalia and deputy CEO Arun Khurana in April after the derivative miscalculation came to light, which led to a 25% slide in the bank's stock price, eroding about ₹15,000 crore of its market value.

The bank's internal audit department in May submitted a report, which said Rs. 172.58 crore was incorrectly recorded as fee income in the microfinance business over the first three quarters of fiscal 2025. These were reversed in the fourth quarter ended March 31, 2025, the bank said in an exchange filing.