IndusInd Bank's Shares Take a Hit

Following the announcement of a forensic audit by EY to investigate a Rs 600 crore discrepancy in its microfinance portfolio, IndusInd Bank's shares plummeted by 6.3% to Rs 776.15 on the BSE. This development has raised serious concerns about the bank's governance and accounting practices.

IndusInd Bank shares have experienced a 46% decline over the past year. (AI image)

Behind the Scenes of the Audit

The bank's decision to engage EY came after statutory auditors flagged the issue during their review of the financial statements for the year ending March 2025. A supplementary communication under Section 143(12) of the Companies Act was submitted, highlighting the need to report potential fraudulent activities.

What's Next for IndusInd Bank?

EY, known for its extensive forensic division in India, will determine whether the irregularity involves fraud and identify those responsible. This audit is separate from another being conducted by Grant Thornton Bharat regarding irregularities in the bank's forex derivatives operations.

According to sources, the discrepancy appears to be confined to the last financial year, possibly within the second and third quarters. However, EY's investigation will delve deeper to uncover any fraudulent activities.

Investor Confidence Shaken

Previous disclosures have already impacted investor trust, with PwC's review of the derivatives portfolio suggesting potential post-tax losses of Rs 1,979 crore, exceeding initial estimates. IndusInd Bank's shares have been under pressure, trading below key moving averages, despite a recent 16.6% monthly increase.