How a Whistleblower Blew the Lid Off IndusInd's Accounting Pandora's Box
IndusInd Bank has faced a Rs 1,960 crore loss on its derivatives portfolio, a management shake-up, and an ongoing investigation into its microfinance business since early March. A new report suggests it all began with a whistleblower letter sent to the bank’s board of directors and the Reserve Bank of India (RBI).
According to The Economic Times (ET), the letter was sent to the bank’s senior management just days before CEO Sumant Kathpalia received a one-year extension from the RBI on March 6—far shorter than the board’s recommended three-year term. Just days later, on March 10, the private lender disclosed accounting lapses in its derivatives portfolio, triggering a 27% drop in its stock price.
While the derivatives issue was still under review by two external auditors, reports surfaced that the bank had hired an audit firm to investigate a Rs 600 crore discrepancy in interest income recognition in its microfinance portfolio. In an exchange filing, the bank later clarified that the firm was supporting its internal audit team in this matter.
What the Gensol and IndusInd Saga Tells Us About Corporate Governance in India
The ET report says the whistleblower letter raised concerns about both the derivatives lapses and issues in the microfinance portfolio.
The report also claims that the bank’s internal audit...
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