IndusInd Bank appoints EY for second forensic audit over Rs 600 crore interest income discrepancy: Report

the auditors advised the bank to initiate a forensic investigation into the issue.

IndusInd Bank’s board has appointed Ernst & Young (EY) to conduct a second forensic audit to probe a Rs 600 crore discrepancy in accrued interest income from its microfinance portfolio, according to a report by The Economic Times (ET), citing two people with direct knowledge of the matter.

The irregularity was flagged during the ongoing statutory audit for the previous financial year, prompting auditors to issue an additional communication under Section 143(12) of the Companies Act, 2013. Following this, the auditors advised the bank to initiate a forensic investigation into the issue.

EY, which operates India’s largest forensic audit practice, will examine whether there were any operational lapses or instances of fraud, and determine accountability. This new probe comes alongside an ongoing forensic audit by Grant Thornton Bharat (GTB), which is investigating irregularities in the accounting of IndusInd Bank’s forex derivatives portfolio.

“This is not an issue spanning multiple years. It seems to have occurred in the last financial year, possibly within the second and third quarters,” one of the sources told ET. However, EY will probe the matter further to rule out any fraud.

A bank source told ET that time constraints were among the reasons for onboarding EY, as GTB’s primary investigation is expected to conclude by the end of April.

Notably, EY has worked with IndusInd Bank in the past. Its affiliate, SR Batliboi & Co., served as the bank’s auditor during 2018–2019, and EY consultants assisted the management in reviewing the derivatives portfolio in the March 2024 quarter, ET reported.

Earlier this month, IndusInd disclosed in a stock exchange filing that PwC, hired to review the forex derivatives accounting, estimated potential losses of Rs 1,979 crore, higher than initial projections of Rs 1,600 crore. The PwC report included substantial disclaimers, according to one of the sources quoted by ET.

The bank assessed the impact of the anomalies based on its June 2024 profit and loss account, estimating a post-tax hit of 2.27% on its net worth as of December 2024.