IndusInd Bank denies media reports on appointing EY: ‘No audit by EY, internal dept to review MFI biz’

IndusInd Bank on Tuesday, April 22, refuted media reports that stated that the private sector lender has roped in EY to conduct another audit, to probe Rs. 600 crorr discrepancy in microfinance portfolio. In a regulatory filing, IndusInd Bank said, “We would like to clarify that the Bank has not engaged EY for a forensic audit as reported in the news item.”

The private sector lender added that the bank has engaged with EY to assist its internal audit dept in reviewing certain records. The exchange filing stated, “As a part of the process of finalization of accounts, the Bank’s Internal Audit Department (IAD) is conducting a review of the Bank’s MFI business to examine certain concerns which have been brought to the Bank’s attention. In connection with this exercise, Bank is engaged with EY to assist the IAD in reviewing certain records of the Bank. The review by the Bank is ongoing.”

Shares of IndusInd Bank declined on April 22, following a report on Economic Times that the bank’s board has brought in EY to conduct a second forensic audit. The report added that the new probe will focus on a ₹600 crore discrepancy related to accrued interest income from the bank’s microfinance portfolio.

Grant Thornton Bharat (GTB) is already examining irregularities in how IndusInd Bank accounted for its forex derivatives portfolio. Earlier this month, IndusInd Bank also enlisted PwC to carry out an independent review of its forex derivatives accounting. That report estimated potential losses at ₹1,979 crore—significantly higher than the initial estimate of ₹1,600 crore

Last week, IndusInd Bank said that accounting lapses in the derivative portfolio will have a negative impact of ₹1,979 crore on the bank's networth.

The bank has assessed an adverse impact (on a post-tax basis) of 2.27 per cent to its net worth as of December 2024 on account of discrepancies relating to derivative deals.

The private sector lender last month reported the accounting lapses in the derivative portfolio estimated to have an adverse impact of approximately 2.35 per cent of the bank's net worth as of December 2024.

Following this, the bank appointed external agency PwC to assess the impact on the bank's balance sheet, lapses at various levels and suggest remedial action.

The agency in its report has quantified the negative impact of the above as of June 30, 2024, at ₹1,979 crore, the bank had said.

The bank will appropriately reflect the resultant impact in the financial statements for 2024-25 and continue to take suitable steps to augment the internal controls relating to the derivative accounting operations, it added.

On Tuesday, shares of IndusInd Bank opened at ₹793.45 and plunged nearly three per cent to hit an intra day low of ₹776.15, before settling 4.88 per cent lower at ₹787.65 apiece on the BSE.