(Reuters) -India’s IndusInd Bank said on Tuesday it estimates a 2.27% hit to its net worth as of December-end after an external agency found discrepancies in its accounts relating to derivative deals.
The bank reported last month it had discovered an accounting discrepancy in the way it booked currency derivatives stretching back at least six years, with an estimated impact of $175 million.
It had also appointed an external agency to independently review and validate the internal findings.
In its report, the external agency has quantified the discrepancies at 19.79 billion rupees ($230.92 million) as of June 30.
Based on this, the bank reassessed its earlier estimated hit of 2.35% as of December-end on a post-tax basis, IndusInd said in a stock exchange filing.
IndusInd said it will appropriately reflect the resultant impact in the financial statements for 2024-25 and take “suitable steps to augment the internal controls relating to the derivative accounting operations.”
Despite the accounting lapse, the bank expects to report a profit for the fourth quarter and fiscal 2025, its CEO told news channel CNBC-TV18 in March.
However, the Reserve Bank of India, the country’s central bank, has asked IndusInd’s CEO and his deputy to step down as soon as replacements are found and approved by it, Reuters reported last month, citing sources.
IndusInd has denied any such push from the RBI.
The discrepancies in derivative trades have also led the bank to appoint Grant Thornton to conduct a forensic review, the report of which is currently awaited.
IndusInd, which is India’s fifth-largest private lender with a 5.4-trillion rupee balance sheet, has been grappling with elevated bad loans in the microfinance segment, leading to a drop in profit in the last two quarters.
IndusInd’s shares have fallen 18.3% since March 10, when the lender first disclosed the impact on its net worth from the discrepancies.
($1 = 85.7000 Indian rupees)
(Reporting by Kashish Tandon in Bengaluru and Siddhi Nayak in Mumbai; Editing by Shreya Biswas)
