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IndusInd Bank has revealed fresh discrepancies in its microfinance loans segment amounting to ₹1,886.2 crore, where some loans were wrongly classified as ‘standard assets’ and subsequently provided for in the current quarter. The correction of this discrepancy, accumulated over fiscal year 2025 (FY25), among other factors, hit the profit and loss account by ₹1,969 crore, contributing to losses of over ₹2,300 crore in the quarter under review (Q4 FY25).
In a separate exchange filing, IndusInd Bank said that “the Board suspects the occurrence of fraud against the Bank and the involvement therein of certain employees having a significant role in the accounting and financial reporting of the Bank. Accordingly, the Board has directed necessary steps be taken under applicable law (including reporting to regulatory authorities and investigative agencies) and to also fix accountability of all persons responsible for these lapses.”
Additionally, the bank revealed in its notes to accounts that incorrect entries in the microfinance portfolio, amounting to a cumulative interest income of ₹673.8 crore and a fee income of ₹172.6 crore, were made. This reversal, net of provisions, hit the current quarter’s net interest income by ₹422.6 crore.
The bank’s gross Non-Performing Assets (NPA) ratio also increased to 3.13% in the reporting quarter, as against 1.92% in the same period last year. Officials, speaking to analysts, attributed the microfinance slippage to two sub-segments, noting that “slippages accumulated in the OOD (overdue) book over the nine months has turned into NPA in this quarter.”
Worst quarter ever
IndusInd Bank posted a net loss of ₹2,329 crore in the fourth quarter of FY25, as against a ₹2,350 crore net profit in the year-earlier period, as accumulated accounting discrepancies significantly impacted net interest incomes. This is likely to be the worst quarter ever for the private bank.
A host of other incorrect accounting entries in terms of operating expenses, provisions, and interest payments were also revealed in the notes to accounts. Additionally, ₹760.8 crore in net interest income and another ₹157 crore in provisions were reclassified, contributing to the losses.
The bank’s Net Interest Income (NII) fell by 43% to ₹3,048 crore in the quarter under review, compared with ₹5,376 crore in the corresponding period of the previous fiscal. The bank’s Net Interest Margin (NIM) also fell to 2.25% in Q4 FY25 from over 4% in the same quarter last fiscal.
Published - May 22, 2025 02:20 am IST
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