IndusInd Bank on Tuesday said the report prepared by the external agency – PwC — showed Rs 1,979 crore of ‘negative impact’ to the net worth of the bank due to the derivative discrepancies.
“Based on the report, the bank said that it has assessed an adverse impact of 2.27 per cent to its net worth as of 2024,” it said in an exchange filing.
The bank also disclosed the ongoing review by an external agency which was independently reviewing the internal findings. “The report from the external agency identified discrepancies relating to derivative deals,” it said.
“The bank will appropriately reflect the resultant impact in the financial statements for FY 2024-25 and will continue to take suitable steps to augment the internal controls relating to the derivative accounting operations of the bank,” it said.
On March 10, 2025, the bank had disclosed that it noted certain discrepancies in accounts balances of its derivative portfolio. The internal review by the bank had estimated an adverse impact of approximately 2.35 per cent of the bank’s net worth as of December 2024.
As per RBI directives on investments issued in September 2023, banks are prohibited from conducting internal trades/ hedging and, accordingly, IndusInd Bank too ceased internal trades from April 1, 2024. However, during an internal review, the bank identified certain discrepancies where accounting of losses on forex derivatives/ swap transactions executed prior to April 2024 (over the past 5-7 years) to hedge forex deposits/ debt were not recognised through NII (net interest income), while the corresponding treasury gains were recognised in the P&L. Derivatives are used by treasury department to convert forex deposits/ borrowings into the rupee.
According to banking sources, it is probable that the bank was aware of the scale of the issue long before they claimed to have discovered it, and that the disclosure was prompted by the RBI. The bank’s handling of internal trades and accrued interest differential has raised questions, as it appears that these transactions were not fully unwound on a daily basis. As a result, the loss accumulated over time instead of being adjusted gradually. This is a likely breach of accounting norms.
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