IndusInd Bank Under Scrutiny for ₹1,979 Crore Loss in Derivatives Book

A major financial mystery is unfolding at IndusInd Bank as it faces intense scrutiny over a ₹1,979 crore loss linked to its derivatives book. The spotlight is now on potential accounting lapses in its treasury operations, with forensic auditor Grant Thornton (GT) diving deep into the bank’s internal systems. The key question—were all the internal hedge transactions properly recorded in the Calypso system?

What Went Wrong?

At the centre of the controversy is the Calypso software, IndusInd’s treasury management system, designed to capture and track all trading activities. Grant Thornton is checking if some internal hedge transactions were left out of the system and instead recorded in separate Excel files. These deals, between the bank’s internal teams, were meant to match its foreign currency transactions with other banks.

IndusInd had aggressively marketed dollar and yen deposits to NRIs, resulting in a sizeable forex derivative book. However, if internal deals were not logged accurately, this could point to serious gaps in oversight, system inefficiencies, or even management override of internal controls.

The Role of PwC and Grant Thornton

PricewaterhouseCoopers (PwC), a previous consultant, had flagged the ₹1,979 crore loss due to accounting discrepancies. However, before IndusInd’s statutory auditors sign off on the financial results, they are awaiting GT’s endorsement of PwC’s report. GT, appointed under SEBI’s LODR (Listing Obligations and Disclosure Requirements) framework, has a broader mandate and is expected to uncover the full extent of the issue.

RBI Steps In

The Reserve Bank of India has reportedly urged IndusInd Bank to finalise its annual accounts by the end of April 2025. This has created added pressure on both the auditors and the bank’s management to expedite the process. Once GT’s report is ready, it could lead to action by regulators, like taking back bonuses or removing officials found responsible.

Read More: IndusInd Bank Share Price in Focus on Receiving External Audit Report

A Jump in Hedging Numbers

One of the most surprising parts of this case is the sharp jump in IndusInd’s hedging book. It went from ₹19.71 crore in March 2022 to ₹142.3 crore in March 2023, and then suddenly shot up to ₹6,177.53 crore by March 2024. What raised more questions is that in the same year, the bank stopped listing ‘valuation of derivatives’ as a key audit matter in its report.

The issue is believed to have come from using two different ways to record the transactions—mark-to-market for deals with other banks and accrual accounting for internal ones. This led to a mismatch in how profits and losses were shown in different records.

IndusInd Bank Share Price Today

As of April 21, 2025, 10:11 AM, IndusInd Bank’s share price stood at ₹828.95 on the BSE, marking a 4.12% increase. The stock’s daily high reached ₹830.35, with a market capitalisation of ₹64,517 crore. Despite ongoing investigations and uncertainty over the final financial numbers, IndusInd Bank’s share price has shown stability, with market sentiment holding steady as investors await the results of the Grant Thornton probe.

Conclusion

IndusInd Bank now stands at a critical juncture. The outcome of Grant Thornton’s investigation could not only impact its immediate financials but also affect its credibility in the market. With regulators, auditors, and shareholders watching closely, the coming weeks will be crucial in solving the ‘Calypso’ mystery.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.