IndusInd Bank on Thursday dismissed allegations made by its former chief financial officer (CFO) Gobind Jain, who has accused the lender’s board chairman Sunil Mehta of covering up accounting irregularities. The bank called the charges “completely devoid of merit” and described them as an attempt to deflect accountability.
In a statement, IndusInd Bank said its board had acted collectively to address incidents of “gross irregularity, suspected fraud and dereliction of duty” that were brought to its attention. The bank added that it had made disclosures “in a fair and transparent manner” based on investigations carried out by independent internal and external experts.
The lender also said it had reported the matter to regulators and law enforcement agencies, and was fully cooperating by submitting all necessary documents. “The bank continues to take all necessary steps in accordance with extant rules and regulations and is confident that accountability will be fixed as per due process of law,” the statement said.
Allegations by ex-CFO
Jain, who resigned in January, has urged the government to remove Mehta as board chairman, alleging his involvement in suppressing accounting lapses that triggered IndusInd Bank’s worst single-day stock fall since its listing. He claimed he uncovered longstanding issues in treasury operations and fought a “lone battle” to highlight them, only to be targeted by senior management.
According to Jain, Mehta and his aides created an “atmosphere of fear” within the bank while shielding those responsible for irregularities.
Fallout of accounting lapses
The controversy stems from IndusInd Bank’s admission earlier this year of accounting lapses in its derivatives portfolio, which the lender said could have a negative impact of 2.35 percent of its net worth as of December 2024. Following the disclosure, the stock plunged 26 percent in a single session, erasing billions in investor wealth.
The fallout also led to the resignation of CEO Sumant Kathpalia in April. In response, the Reserve Bank of India (RBI) said IndusInd remained “well-capitalised” and its financial position “satisfactory.” RBI Governor Sanjay Malhotra later described the episode as an “incident” rather than a systemic failure, reiterating that India’s banking system remained “safe and secure.”
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