New Delhi: The Reserve Bank of India (RBI) has reportedly directed the board of IndusInd Bank to initiate a comprehensive forensic investigation following significant accounting discrepancies that caused the bank’s market capitalization to plunge by over 25% in a single day this March. The regulator has asked the private lender to fix accountability, particularly examining the role of senior management and external audit firms.
Though the RBI refrained from naming IndusInd Bank directly during its media briefing on Wednesday, Deputy Governor J. Swaminathan confirmed that such steps are routine when irregularities are detected. “Whenever such incidents occur, we instruct the boards to carry out proper forensic audits and accountability reviews,” Swaminathan said. “The scope of such probes includes internal staff, external consultants, and service providers. Anyone found responsible will be dealt with accordingly.”
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Disruption Spurs Regulatory Action
The accounting lapse, reportedly linked to the bank’s derivatives portfolio, resulted in a ₹1,600 crore loss. This raised serious concerns among investors and depositors, prompting the central bank to step in. Swaminathan emphasized that the RBI’s foremost priority remains the protection of customers. “We have taken proactive measures to reduce the impact on customers and maintain confidence in the banking system,” he stated. He added, “We don’t let a crisis go to waste. Every episode offers insights and helps us refine our supervisory tools.”
Systemic Stability Reaffirmed
In a parallel statement, Financial Services Secretary Sanjay Malhotra assured stakeholders that India’s banking sector remains robust and well-supervised. “The overall system is resilient,” Malhotra said. “Isolated incidents should not be seen as institutional failures. These are episodes that our frameworks are designed to detect and respond to.” Highlighting the strength of India’s financial sector, he pointed out that while 70 cooperative banks have failed in the last 8–9 years, the number is marginal when compared to the total institutions under regulation.
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A Broader Push for Accountability
This development marks yet another instance of the RBI pushing for greater transparency and accountability in the banking sector. The central bank has consistently emphasized the role of effective internal audits, layered risk management systems, and responsible corporate governance to avoid recurrence of such events. IndusInd Bank is yet to issue an official statement regarding the probe. However, the bank’s board is expected to submit findings from the forensic audit in due course.