Shares of private lender IndusInd Bank Ltd. slipped three percent in trade on Thursday, May 15 as reports suggested the bank's internal audit department opened a fresh inquiry into past reversals.
Economic Times reported that the bank's audit department was looking into fresh new issues, that were different from the previously publicized derivatives discrepancies and microfinance issues. Sources to ET said the fresh the new inquiry pertains to entries under “other assets” and “other liabilities” in operating expenses.
At 10.15 am, IndusInd Bank shares were quoting Rs 773.80 per share, down one percent on the NSE after trimming some early losses.
On May 14, Moneycontrol exclusively reported that the board of IndusInd Bank is considering imposing penalties on two officials who were at helm of affairs of the bank: former MD & CEO Sumant Kathpalia and Deputy CEO Arun Khurana.
As per sources aware of the development, the bank’s board has been deliberating on the matter and met a few times to discuss the issue. Further, legal opinion has also been sought on the issue.
IndusInd, India's fifth-largest private sector bank, disclosed in March that years of incorrect accounting of internal derivative trades had led to a $230 million hole in its $60.8 billion balance sheet.
As per IndusInd Bank, the forensic audit report identified incorrect accounting of internal derivative trades, especially in case of early termination of those trades, which resulted in recording of notional profits, as the principal root cause for accounting discrepancy.
Grant Thornton, hired by the bank to conduct an independent forensic investigation, found in its review of internal accounts and communications that there were indications Kathpalia and Khurana traded in shares of IndusInd "during a period of seeming non-disclosure," Reuters reported, citing a document.
Kathpalia in his resignation letter said he was taking "moral responsibility", while Khurana resigned citing "unfortunate developments".
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