IndusInd Bank Shares Drop 6% After New Accounting Problems Come to Light

IndusInd Bank saw its shares fall sharply by around 6% on May 16, 2025, after it revealed some serious accounting issues. The bank, one of India’s major private lenders, admitted to discovering problems in how it had recorded certain financial numbers. This news rattled investors and raised big questions about how things were being managed behind the scenes.

₹595 Crore Found in the Wrong Place

During a recent internal audit (a financial health check done by the bank itself), it was found that ₹595 crore was wrongly listed in the “other assets” section of the bank’s books. These funds didn’t have proper backing or clear explanation. To make things look balanced, the same amount was added under “other liabilities” – essentially cancelling it out.

This kind of accounting is unusual and has sparked concerns. It raised red flags about the kind of checks and balances in place at the bank. Some employees who may have been involved are now being looked into.

₹674 Crore Mistake in Microfinance Interest Income

That wasn’t the only issue. The bank also admitted to wrongly showing ₹674 crore as income from interest on microfinance loans (these are small loans often given to low-income borrowers). This error happened over three quarters – which means it went unnoticed for quite some time. The mistake was later corrected in January 2025.

Microfinance has been a tricky area for IndusInd. It makes up around 9% of the bank’s total loans, and many of these loans have recently turned into bad loans. Adding fake income in this area only made the problem worse.

Top Bosses Resign

These accounting troubles have also led to major changes in the bank’s leadership. The Managing Director and CEO, Sumant Kathpalia, resigned after an investigation into another issue related to how the bank handled complex financial trades called derivatives. Deputy CEO Arun Khurana also stepped down.

Such high-profile exits are uncommon and show just how serious the situation is.

RBI Responds, Says Bank Is Still Strong

The Reserve Bank of India (RBI), which keeps a watch over all banks, said that while these accounting mistakes are serious, IndusInd Bank is still financially strong. It has more than enough capital to handle shocks, and has a good buffer in place to deal with bad loans.

The RBI has told the bank to clean up its books and make sure such issues don’t happen again. It has also asked for full transparency with investors and customers.

What Happens Next?

IndusInd Bank is now under close watch. It has hired global firm Ernst & Young to do a deeper investigation and double-check the numbers. Another audit firm, Grant Thornton, is already reviewing some of the past records related to trading.

The bank’s shares have fallen nearly 46% over the past year, and investors are understandably nervous. Many are now waiting to see how the bank fixes these problems and rebuilds trust.