In the initial inquiry conducted by the Economic Offences Wing (EOW) into the Rs 2000 crore accounting discrepancy at IndusInd Bank, Mumbai Police EOW plans to contact the Reserve Bank of India (RBI) for clarification on specific regulations and policies. EOW officials have already taken statements from approximately 12 individuals associated with IndusInd Bank, including former top executives and staff, as part of the ongoing investigation into the accounting irregularities amounting to Rs 2000 crore.
According to EOW sources, the investigation is comprehensive and has progressed to a stage where officials are looking to understand banking regulations and policies better by seeking guidance from the RBI. Apart from the identified accounting discrepancies totaling Rs 1900 crore, an additional Rs 250 crore is also subject to scrutiny. The current focus of the investigation revolves around foreign currency hedging practices, with employees indicating that hedging activities were standard procedures.
EOW officials aim to ascertain the legality of foreign currency hedging in banking operations and believe that the RBI holds the key to providing a clear perspective on the matter. Furthermore, during interviews, bank officials revealed that the accounting discrepancies occurred due to continual provisioning whenever accounts exhibited a shortfall in funds, a practice in effect since 2023 under the supervision of former Deputy CEO Arun Khurana.
The audit report by Grant Thornton, commissioned by the bank, has been referenced by authorities, indicating that senior management was aware of the accounting irregularities since 2023. The EOW is also seeking legal advice to determine if any criminal elements were involved in the processes leading to the accounting discrepancies.
Allegations against the former top management of IndusInd Bank suggest that their actions resulted in wrongful losses for the bank due to the identified accounting discrepancies, leading to a decline in the bank’s market capitalization. Former CEO Sumanth Kathpalia, former CFO Gobind Jain, and former Deputy CEO Arun Khurana have been questioned by EOW officials regarding potential accounting malpractices that may have led to the creation of false assets.
The allegations further imply that the former top management might have profited from manipulating the books to inflate stock prices, engaging in insider trading activities to benefit financially. IndusInd Bank initially disclosed the accounting irregularities, initially linked to its derivatives portfolio and later extending to its microfinance operations, prompting the resignations of CEO Sumant Kathpalia and Deputy CEO Arun Khurana in April 2025.
The EOW of Mumbai Police is actively investigating the matter and has gathered statements from several bank employees. Subsequently, summons were issued to the former CEO, Deputy CEO, and CFO, who complied and provided their statements. There is a possibility that the same senior officials might be called for further questioning, as per insider information.
Former CFO Gobind Jain had previously raised concerns regarding alleged irregularities in the bank’s treasury operations, estimating the discrepancies to exceed Rs 2000 crore over a decade. In a letter dated August 26, Jain addressed the Prime Minister’s Office, highlighting significant irregularities persisting in the bank’s treasury functions for an extended period.