IndusInd Bank is under scrutiny following the disclosure of an accounting error amounting to ₹674 crore and the flagging of unsubstantiated balances in "other assets". The bank revealed that its internal audit department (IAD) found that ₹674 crore was incorrectly recorded as interest income over three quarters of FY25. This amount was fully reversed on January 10, 2025. In addition to the interest misrecording, the IAD identified ₹595 crore of unsubstantiated balances in "other assets," which were subsequently offset against corresponding balances in "other liabilities" in January 2025.

The bank's disclosure follows a report citing a whistleblower complaint that triggered the internal audit. The audit committee directed the IAD to review transactions recorded under "other assets" and "other liabilities" after receiving the complaint. The IAD submitted its report on May 8, 2025, outlining the accounting discrepancies. The report also examined the roles and actions of key employees in relation to these lapses.

IndusInd Bank has stated that it is taking corrective measures to strengthen internal controls and fix accountability for the lapses. The board is taking necessary steps to ensure that appropriate action is taken against those responsible.

These recent disclosures come shortly after the bank reported accounting irregularities in its derivatives portfolio. The issues in the derivatives portfolio led to the resignations of the CEO, Sumant Kathpalia, and Deputy CEO, Arun Khurana. The Reserve Bank of India (RBI) had previously extended Kathpalia's term by only a year. In March 2025, IndusInd Bank reported that the accounting lapses in the derivative portfolio were estimated to have an adverse impact of approximately 2.35% of the bank's net worth as of December 2024. An external audit estimated the negative impact at ₹1,979 crore as of that time.

The bank's microfinance (MFI) portfolio has been under stress. As of December 2024, the MFI portfolio stood at ₹32,564 crore, accounting for 9% of the bank's total loan book. In Q3FY25, the bank reported incremental slippages of ₹2,200 crore, a major portion of which originated from the MFI portfolio.

Following the resignations of the CEO and Deputy CEO, the RBI approved IndusInd Bank's request to form an executive committee to discharge the duties and responsibilities of the CEO. The "committee of executives" comprises Soumitra Sen, head of consumer banking, and Anil Rao, chief administrative officer.

In response to these events, brokerage firms have turned cautious about IndusInd Bank. The stock has already declined 45% over the past year and 19% year-to-date. On May 15, 2025, IndusInd Bank was trading at ₹780.30, which is 0.16% lower compared to its previous closing price of ₹781.55. The market capitalization of IndusInd Bank is ₹60,789.62 crore as of May 15, 2025.