PwC Submits Draft Review on IndusInd’s Derivatives, But Bank Denies Receipt

PricewaterhouseCoopers (PwC) has submitted a draft report to IndusInd Bank after reviewing the bank’s forex derivatives portfolio. This report only covers accounting aspects and does not point fingers or explain when the errors occurred, according to reports.

The accounting review began in October 2024, shortly after IndusInd admitted it had misreported forex derivative losses over several years. The bank is reviewing PwC’s draft and is expected to give feedback. PwC worked closely with IndusInd officials during the review process.

Separate Forensic Probe by Grant Thornton

While PwC reviewed the accounting, another firm, Grant Thornton Bharat, is conducting a forensic audit. This investigation aims to find out what caused the losses, identify who was responsible, and understand how the errors happened.

Read More Upcoming Q4FY25 Earnings This Week: IREDA, Wipro, Infosys and More Set to Release Earnings. 

IndusInd Denies Receiving PwC’s Report

In an official statement, IndusInd Bank said it had not received any report from external agencies.

“IndusInd Bank hereby clarifies that the Bank has not received the report from the external agencies who are conducting the review,” the statement read.

Background: ₹2,100 Crore Derivative Losses

The issue came to light on March 10, when the bank revealed a ₹2,100 crore loss linked to forex swap deals made between 2017 and 2024. These losses had not been recorded correctly in the books. The bank had recorded treasury gains in profits but failed to account for matching derivative losses through net interest income (NII).

As a result, IndusInd’s shares plunged 23%, and analysts estimated that the losses could reduce the bank’s net worth by ₹1,600 crore — more than the ₹1,401 crore net profit it earned in the December 2024 quarter.

Regulatory Action and Internal Shake-ups

The bank partly blamed the Reserve Bank of India’s (RBI) September 2023 rule, which banned internal trades and hedging. IndusInd stopped these practices in April 2024, but earlier losses still went unnoticed in audits.

The crisis also triggered internal changes, including the exit of CFO Gobind Jain. Over the past 2 years, CEO Sumanth Kathpalia and Deputy CEO Arun Khurana had also sold shares worth a combined ₹157 crore.

Stock Movement

After falling to a low of ₹655 on March 11, the stock has slightly recovered to ₹692 as of March 19. However, it’s still down over 53% in the last 6 months.

KPMG and EY Also Engaged

Earlier this year, IndusInd also brought in KPMG and EY to help review its internal policies and how it handled forex derivatives in its accounting books.

RBI Watching Closely

The RBI has asked IndusInd’s board to ensure accountability for the mistakes. RBI Deputy Governor J. Swaminathan said any individuals or parties responsible — whether from inside or outside the bank — must face action.

“Whenever such incidents occur, we direct the boards to ensure that proper forensic and accountability studies are carried out,” he said.

Banking System Remains Strong

Despite the issue, RBI Governor Sanjay Malhotra assured the public that India’s banking system is stable and resilient. He noted that while some cooperative banks have failed in recent years, the overall impact on the system was small.

About IndusInd Bank Limited

IndusInd Bank Limited is a Mumbai-based Indian bank offering financial services. It was founded in April 1994 and is backed by the Hinduja Group.

As of April 15 at 10:32 AM IST, IndusInd Bank share price is trading at ₹733.30, up ₹43.80 or 6.35% for the day. The stock opened at ₹705.00, hit a high of ₹733.85, and a low of ₹693.05. The bank has a market capitalisation of ₹57,190 crore, a price-to-earnings (P/E) ratio of 7.88, and offers a dividend yield of 2.25%. Over the past 52 weeks, the stock has touched a high of ₹1,557.90 and a low of ₹606.00.

Conclusion

The unfolding situation at IndusInd Bank has not only triggered regulatory scrutiny but also shaken investor confidence. With forensic audits underway and RBI demanding clear accountability, the bank’s next steps will be critical in restoring trust and ensuring transparency in its financial reporting. All eyes are now on the final audit findings and the bank’s actions to address past discrepancies and strengthen internal controls.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a 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.   

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.