New Delhi | December 24, 2025 | The challenges facing private sector lender IndusInd Bank are set to intensify, with the Serious Fraud Investigation Office (SFIO) formally initiating an investigation into alleged accounting irregularities amounting to nearly ₹1,960 crore. The probe relates primarily to discrepancies identified in the bank’s derivatives transactions, raising concerns over financial reporting and internal controls.
In a regulatory disclosure to stock exchanges on Wednesday, IndusInd Bank confirmed that it had received an official communication from SFIO on December 23, 2025. The letter seeks detailed information and documents under Section 212 of the Companies Act, 2013, a provision that empowers the central government to entrust serious and complex corporate fraud cases to the SFIO.
Why the Section 212 probe matters
Section 212 of the Companies Act, 2013 grants the central government authority to order an SFIO investigation into cases involving serious, intricate or large-scale corporate fraud. Such probes may be initiated based on regulatory reports, special resolutions, matters of public interest, or requests from government departments.
Once a case is taken up under this section, SFIO is vested with wide-ranging powers to examine financial records, accounting practices, internal decision-making processes, and the conduct of senior management. Legal and corporate governance experts note that the invocation of Section 212 typically signals that regulators view the matter as beyond routine compliance lapses, warranting a deeper forensic examination.
How the accounting discrepancies came to light
Earlier, on December 18, 2025, IndusInd Bank had informed investors that under the Reserve Bank of India’s (Reserve Bank of India) Master Directions on Fraud Risk Management, issued on July 15, 2024, banks are required to report all frauds involving amounts of ₹1 crore and above not only to the RBI but also to SFIO, which operates under the Ministry of Corporate Affairs.
In compliance with these guidelines, the bank disclosed that it had reported certain issues related to its internal derivatives operations, unverified balances under the heads of ‘other assets’ and ‘other liabilities’, as well as matters concerning interest and fee income from small-ticket and microfinance loans, to SFIO on June 2, 2025.
Breakdown of the ₹1,960 crore impact
The scale of the financial impact became clearer following findings by the bank’s external auditor, who, in April 2025, highlighted accounting inconsistencies in the derivatives portfolio—particularly in futures and options (F&O) trading. According to the audit report, these discrepancies resulted in a cumulative adverse impact of ₹1,959.98 crore on the bank’s profit and loss account as of March 31, 2025.
Subsequently, on April 15, 2025, IndusInd Bank disclosed the findings of an independent external agency, which estimated that the accounting lapses in derivatives trading could lead to a negative impact of approximately ₹1,979 crore on the bank’s net worth.
Impact on net worth and total assets
The bank has stated that due to the derivatives-related accounting irregularities, its net worth was adversely affected by around 2.27 per cent on a post-tax basis as of December 2024. The estimated impact on total assets stands at approximately 2.35 per cent.
IndusInd Bank has acknowledged that it had already notified regulatory authorities about these issues last month and has initiated a review of its internal control mechanisms, risk management systems, and accounting processes.
Market and investor implications
The initiation of an SFIO probe is expected to weigh on investor sentiment and market perception of the bank. Analysts point out that while the issues pertain to earlier accounting periods, the involvement of SFIO elevates the matter to a high-level regulatory investigation, potentially increasing scrutiny of the bank’s governance framework and oversight practices.
Market participants will closely watch how the probe unfolds, particularly any observations related to management accountability, systemic control failures, or the need for corrective regulatory action.
