Ministry of Corporate Affairs orders SFIO probe into IndusInd Bank for accounting discrepancies

Economic Times
Economic Times
56m ago
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The MCA ordered an SFIO probe into IndusInd Bank over ₹1,960 crore accounting discrepancies flagged by auditors between FY2015-16 and FY2023-24.
Ministry of Corporate Affairs orders SFIO probe into IndusInd Bank for accounting discrepancies
A What happened
The Ministry of Corporate Affairs directed the Serious Fraud Investigation Office to probe IndusInd Bank due to accounting discrepancies totaling about ₹1,960 crore over FY2015-16 to FY2023-24, as flagged through multiple statutory auditor ADT-4 forms under the Companies Act. These irregularities include accounting errors, weak internal controls, manipulation of accounts, fictitious accounts creation, and misclassification of income and assets. While the Mumbai Police’s Economic Offences Wing, after a preliminary inquiry, found no evidence of fund siphoning or diversion, the SFIO’s inquiry aims to safeguard public interest by investigating these allegations, examining related-party transactions, loans, and investments. The investigation coincides with ongoing regulatory and forensic audits, including PwC and Grant Thornton reviews, which named individuals linked to the lapses.
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Key insights

  • 1

    Structural weaknesses in bank governance: The reported accounting errors and weak internal controls at IndusInd Bank highlight systemic governance failures that could affect investor and depositor confidence.

  • 2

    Regulatory coordination challenges: The concurrent but differing findings of the Mumbai EOW and the MCA-mandated SFIO investigation underline complexities in India’s financial regulatory ecosystem and enforcement coordination.

  • 3

    Risks of delayed detection in banking irregularities: Discrepancies spanning nearly a decade suggest risks in timely detection and remediation of accounting malpractices within financial institutions.

Takeaways

The MCA-directed SFIO investigation into IndusInd Bank aims to address long-standing accounting irregularities and strengthen regulatory oversight. The case exemplifies challenges in detecting and managing financial discrepancies in major banks, with broader implications for India’s financial governance.

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