The Securities and Exchange Board of India (Sebi) announced on Thursday that it is investigating potential violations by IndusInd Bank’s senior management, alleging accounting frauds estimated at Rs 3,400 crore.While the Reserve Bank of India (RBI) will handle the primary investigation, Sebi is specifically examining the alleged securities market violations by bank officials.“The RBI is looking into whatever Sebi has to do in relation to…whatever Sebi’s remit is…Sebi is doing… If there are any egregious violations by anyone in their capacity, Sebi is looking into it,” Sebi Chairman Tuhin Kanta Pandeyy told reporters during an Assocham industry event, as quoted by PTI.IndusInd Bank’s board acknowledged on Wednesday the suspected involvement of certain employees in the fraud, instructing management to notify investigative and regulatory authorities.The private sector bank faces scrutiny over fraudulent activities in derivatives, microfinance portfolios and balance sheet disclosures. Following top-level resignations, the bank has initiated an internal audit review alongside a forensic investigation.Internal audit findings revealed senior bank officials, including former Key Management Personnel, had bypassed crucial internal controls. The bank has notified the central government about senior management’s likely involvement in the accounting fraud.IndusInd Bank confirmed that all identified discrepancies have been incorporated into the financial results for the quarter and year ending March 31, 2025.The March quarter saw multiple financial impacts: Rs 1,960 crore from incorrect derivative trades recognition, Rs 674 crore interest income reversal, Rs 172 crore microfinance-related fraud, Rs 595 crore correction of manual entries, and increased slippages, totalling Rs 3,400 crore.The bank recorded a Rs 2,329 crore net loss in March quarter FY25, marking its poorest performance amid accounting irregularities across derivatives, microfinance, and assets/liabilities. This financial report was the first since the report of the accounting irregularities.However, despite poor quarterly results, IndusInd Bank shares recovered on Thursday, closing 1.82 per cent higher at Rs 785.10 on BSE, after an initial decline of 5.89 per cent to Rs 725.65.In another development with regards to the bank, defence PSU Bharat Electronics Limited (BEL) will replace IndusInd Bank in the BSE Sensex following the index rejig.Also read: In BSE Sensex rejig, BEL to replace IndusInd Bank, Tata Group’s Trent to oust Nestle from June 23, 2025Meanwhile, Financial analysts suggest IndusInd Bank may experience subdued performance in the near future, with the incoming MD and CEO facing significant challenges in rebuilding the bank and restoring investor confidence.Following April 29 resignations of CEO Sumant Kathpalia and Deputy CEO Arun Khurana, the bank’s Board established an Executive Committee for interim operations management.The Board must propose new MD candidates to the RBI by June 30.
