IndusInd Bank sees no fresh financial hit as BFIL probe, internal control overhaul progress

IndusInd Bank

IndusInd Bank on October 18 said it does not expect any further material financial loss arising from the governance and accounting issues under review, as the impact of these matters has already been captured in previous financial statements.

In an exchange filing, the lender said its subsidiary, Bharat Financial Inclusion Ltd (BFIL), continues to investigate instances of operational and credit losses, unapproved practices, and inappropriate invoices raised by a service provider. These issues, according to the Bank, may indicate lapses in governance and management override of controls.

“This has got to do with a couple of practices which is specific to that business line. It's a small ticket loan business, which can happen in that business. That's really what they're talking about where there have been some inappropriate payments made out to some of our collection agencies in the subsidiary entity. We're not talking about the bank entity here, but that's specific to that business,” IndusInd Bank management said during the post earnings call.

The auditor of BFIL had earlier issued a qualified conclusion in its limited review dated October 17, 2025, on the financial results for the September quarter and half year. However, the Bank clarified that these observations were not material to the group’s overall results.

Meanwhile, at the group level, the Board of Directors has set up an executive-level Project Management Group to strengthen internal controls, enhance reconciliation systems, and reduce manual accounting entries. The move follows the detection of accounting discrepancies amounting to nearly Rs 1,960 crore in FY25.

The Bank said the implementation of these corrective steps is being closely monitored to ensure stronger oversight and accountability. Both the Bank and its subsidiary are also pursuing disciplinary action where required and reinforcing internal processes to prevent recurrence of such lapses.

In the July-September quarter, the lender has accelerated the provisions to Rs 2,631 crore as compared to Rs 1,820 crore for the corresponding quarter of previous year.

“The Bank accelerated write-offs as well as increased provisions on microfinance as a prudent measure,” Anand said.

The Provision Coverage Ratio was improved at 72% as on September 30, 2025.

IndusInd Bank Ltd reported a consolidated net loss of Rs 437 crore for the quarter ended September 30, 2025 (Q2 FY26), compared with a net profit of Rs 1,331 crore in the same period last year. The bank's loss was driven by a sharp fall in core income and a significant rise in provisions, even as the lender maintained stable asset quality and strong capital buffers.