Mumbai — Special Report
In a revelation that has shaken India’s banking sector, IndusInd Bank faces scrutiny over accounting irregularities that have persisted for nearly a decade. While the bank publicly disclosed in March 2025 that discrepancies in its derivatives portfolio could result in significant financial losses, recent investigations by the Mumbai Police’s Economic Offences Wing (EoW) have revealed that these irregularities were long-standing and systemic.
The EoW has recorded statements from former CEO Sumant Kathpalia, former CFO Gobind Jain, and former Deputy CEO Arun Khurana, along with testimonies from six to seven bank employees. Authorities are analyzing these statements and supporting documents, and sources indicate that further questioning of the former executives could follow.
A Decade-Long Accounting Anomaly
According to Gobind Jain, who initially blew the whistle, the discrepancies in IndusInd Bank’s derivatives portfolio date back to 2015. He claims that the then-board, senior management, and former finance head S.V. Jaregaonkar were aware of the irregularities.
FutureCrime Summit 2026: Registrations to Open Soon for India’s Biggest Cybercrime Conference
Jain submitted multiple documents to authorities, including four resignation letters, repeatedly urging the bank to appoint independent auditors to investigate. He warned that inaction could result in severe financial damage. His initial resignation in June 2024 was not accepted, prompting him to submit three additional letters before his resignation was finally approved in January 2025.
Police Investigation
On September 24, 2025, the EoW recorded statements from Kathpalia, Jain, and Khurana, as well as several employees. Authorities indicate that further interrogations may be conducted depending on the findings.
The investigation revealed that irregularities were not limited to the derivatives portfolio but also extended to the microfinance business. Both Kathpalia and Khurana resigned amid the ongoing probe.
Financial Impact
The March 2025 disclosure indicated that discrepancies in derivatives trading could result in losses of ₹1,577 crore. Subsequent audits revealed a quarterly loss of nearly ₹2,000 crore.
An interim SEBI order dated May 27, 2025, showed that the bank’s management had knowledge of these accounting discrepancies 15 months prior to public disclosure. Reports suggest that Kathpalia and Khurana may have sold shares during this period, potentially benefiting from insider knowledge. SEBI has barred them and several other executives from trading due to alleged insider trading violations.
Expert Perspective
Analysts note that the case highlights vulnerabilities in internal controls and corporate governance within India’s banking sector. It demonstrates that delayed action, even when senior management is aware, can result in large-scale financial fraud.
Experts emphasize that as financial products become increasingly complex and digital transactions expand, proactive oversight, transparency, and regulatory compliance are essential to safeguard banks and investors.
Conclusion
The IndusInd Bank accounting scandal underscores that oversight in banking is not merely technical but strategic and systemic. A decade-long lapse in accounting practices demonstrates that without timely action and rigorous monitoring, financial institutions are exposed to severe risk.
As India’s banking and digital financial ecosystem continues to expand, the lessons from this case could serve as a blueprint for governance, compliance, and risk management across the sector.
