Mumbai, October 14, 2025: The alleged treasury fraud at IndusInd Bank has taken a more serious turn, with newly surfaced internal emails suggesting that senior executives were aware of questionable accounting practices as early as 2017—nearly eight years before the controversy became public.
The emails, reviewed by Moneycontrol, indicate that concerns around foreign exchange (Forex) contracts and hedging practices were known within the bank’s treasury and risk management departments but were allegedly not escalated to regulatory or board levels. These revelations deepen the ongoing investigation into whether the bank manipulated treasury accounting to artificially boost profitability and conceal risk exposure.
Internal Emails Point to Early Awareness
An email dated June 29, 2017, written by Arun Khurana, then Country Head of Global Markets Group at IndusInd Bank, reveals a casual approach to hedging approvals and compliance. In his communication, Khurana wrote:
“I don’t think this should be made too complicated. I would hedge in every situation, regardless of the treatment. In fact, we haven’t taken ALCO approval for hedging exposures in the past. Since this is a long-term matter, I think it’s appropriate. Perhaps we should just circulate it among ALCO members for consensus. I’ve already discussed this with the MD.”
The email, addressed to senior treasury and risk officers, highlights that key treasury decisions were made without formal approval from the Asset Liability Committee (ALCO) — a mandatory oversight body in banks that governs risk exposure and compliance for trading and hedging operations.
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The tone of the communication suggests a pattern of internal normalization of rule-bending practices, which could have contributed to the misstatement of the bank’s financial position over multiple years.
Forex Accounting Practices Under Scrutiny
At the center of the controversy are foreign exchange derivative contracts and mark-to-market (MTM) accounting treatments used in the bank’s treasury operations. Investigators are examining whether losses were deferred or masked, and whether the bank reclassified exposures to present a healthier profit and balance sheet position.
Sources indicate that certain FX contracts were allegedly rolled over or restructured without being properly recorded, thereby understating liabilities and inflating treasury income. The alleged manipulation may have influenced reported profits, net worth, and possibly executive performance-linked bonuses.
These revelations come months after whistleblower reports in early March 2025, which first brought the alleged treasury misstatements to public attention. The Reserve Bank of India (RBI) and the Ministry of Corporate Affairs (MCA) have since sought clarifications from the bank’s management.
Regulatory Oversight and Industry Implications
If proven, the case could have far-reaching implications for corporate governance and audit oversight in the Indian banking system. Experts note that treasury operations are typically subject to stringent internal controls and external audits, making such prolonged irregularities difficult to conceal unless there was systemic complicity or oversight failures.
Financial analysts say the case exposes weak risk governance frameworks in certain private banks, where aggressive growth targets can lead to “creative” accounting practices within treasury and derivatives desks.
A senior banking expert commented, “The worrying part is that these practices were known years ago but ignored internally. It raises questions about audit independence, internal escalation mechanisms, and accountability of top management.”
The RBI is reportedly reviewing whether senior management’s role in approving or overlooking treasury misstatements violated the Banking Regulation Act or disclosure norms under the Companies Act.
IndusInd Bank’s Response
As of now, IndusInd Bank has not issued a detailed response to the newly surfaced emails. The bank has previously maintained that its treasury operations “follow all regulatory guidelines” and that “no financial misstatement has occurred.” However, insiders suggest that the investigation is ongoing, and more internal communications are likely to emerge in the coming weeks.
The controversy adds to the growing list of compliance challenges facing Indian private lenders, as regulators tighten scrutiny of treasury transparency, risk disclosures, and derivatives accounting
