The Serious Fraud Investigation Office, operating under the Ministry of Corporate Affairs, has initiated a comprehensive probe into alleged accounting irregularities exceeding Rs 2,000 crore at IndusInd Bank. This escalation follows a preliminary inquiry conducted by the Mumbai Police’s Economic Offences Wing, with the investigation formally ordered under Section 212 of the Companies Act to examine claims of derivatives accounting misconduct and potential profit inflation.

Central to the scrutiny are the actions of former CEO Sumant Kathpalia, former Deputy CEO Arun Khurana, and other senior executives, whose roles in overseeing the bank's operations are being thoroughly assessed. The probe encompasses an additional questionable entry of approximately Rs 250 crore, alongside the primary lapse estimated between Rs 1,900 and 2,000 crore, as investigators seek clarification from the Reserve Bank of India regarding compliance with norms on foreign currency hedging practices.

Statements from numerous current and former employees, including top management figures, have been recorded by the Economic Offences Wing, which is also reviewing a Grant Thornton audit report commissioned by the bank. The audit allegedly indicates that senior leadership was informed of the discrepancies as early as 2023, prompting questions about whether provisions were adequately made and if the trading desk's establishment under Khurana's direct oversight contributed to the issues.

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Current bank management has leveled accusations against the previous leadership, alleging deliberate actions that inflicted wrongful losses, potentially notional through declines in share price and market capitalization upon disclosure. Authorities are additionally investigating claims of personal financial benefits accrued by former executives through the accounting adjustments, including possible insider trading that may have yielded substantial gains.

The irregularities, initially identified in the derivatives portfolio and extending to the microfinance segment, precipitated the resignations of Kathpalia and Khurana in April 2025. Former CFO Gobind Jain, who previously highlighted treasury-related lapses spanning nearly a decade in communications to high-level authorities, has also been questioned multiple times alongside the others, with further summons possible as the multi-agency investigation progresses.

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