IndusInd Bank Faces Major Setback: Chairman Ashok P Hinduja Responds to Fraud Allegations
IndusInd Bank's Financial Turmoil
New Delhi: Ashok P Hinduja, the Chairman of IndusInd International Holdings Limited (IIHL), which promotes IndusInd Bank, took immediate action on Thursday after the bank reported a staggering loss of Rs 2,236 crore for the January-March quarter due to fraud allegations.
Hinduja reassured stakeholders, stating, "While the bank's capital adequacy remains strong, IIHL is committed to providing any necessary equity support for future growth, as we have consistently done for the past three decades."
The Reserve Bank of India (RBI) has initiated an investigation into the accounting irregularities at IndusInd Bank.
Additionally, the Securities and Exchange Board of India (SEBI) is probing potential violations related to the bank's fraud disclosure and insider trading concerns, as confirmed by SEBI Chairman Tuhin Kanta Pandey.
On Wednesday, IndusInd Bank's Board revealed suspicions of fraud involving certain employees responsible for the bank's accounting and financial reporting, prompting them to take appropriate legal actions and notify regulatory bodies.
An internal audit conducted by IndusInd Bank on May 20 uncovered that Rs 172.58 crore had been mistakenly recorded as fee income in the Microfinance (MFI) sector over three quarters, a mistake that has since been rectified in the fourth quarter of FY25.
This revelation came shortly after the unexpected dismissal of the bank's CEO last month, following the discovery of significant irregularities in its foreign exchange derivatives and microfinance operations.
Hinduja praised the regulator's methodical approach in addressing these issues, stating, "The guidance provided by the regulator has been commendable, reflecting their past support for the banking sector."
He expressed unwavering confidence in the bank's Chairman and Board of Directors for their prompt actions to rectify discrepancies and related concerns.
Hinduja emphasized that these efforts would enhance transparency and governance, ultimately restoring trust in the bank. He noted that the current management's coordinated actions, under the Board's oversight, have kept the bank's operations robust and capital adequate.
He concluded by highlighting the enduring trust customers have in the bank, stating, "This marks a new beginning with a clean slate, allowing us to reclaim the esteemed position the bank has held for decades."